The boards of National Bank of Greece and Alpha Bank, the two largest commercial banks in Greece, yesterday approved of their merger, establishing a giant new bank aimed at competing in the challenging environment of the eurozone. The two banks will now seek shareholders’ approval for a merger, which will take place through a share swap. Two separate advisers and two auditors have been appointed to determine the precise relationship between their stock and set a target for completing the process in six months. National Bank chairman Theodoros Karatzas will be the executive president of the new bank while Alpha Bank president Yiannis Costopoulos will be its governor. The executive committee will comprise A. Tamvakakis, T. Pandalakis and A. Vranas from National and K. Kyriakopoulos and D. Madzounis from Alpha Bank. The new bank is expected to be the 23rd largest in Europe with assets of 30 billion drachmas. It is expected to reduce the combined personnel of 23,000 by about 2,500 people by applying a voluntary retirement program at a cost of 100 billion drachmas. It is also planning the purchase of banks abroad, mainly in Central Europe but also in the United States. The merger has Prime Minister Costas Simitis’s blessing. This is an event of huge political, economic and social importance, he told a Cabinet meeting. The Federation of Greek Industries also hailed the news. Despite the difficulties that the project will face, it already seems to be affecting the domestic business scene and everyone expects similar moves in other sectors. Other banks have sprung into action, with Commercial Bank making a bid to buy the Postal Savings Bank, while Eurobank also has its eye on Piraeus Bank. The Agricultural Bank and smaller banks are also on the move. The news of the merger also stimulated interest at the Athens Stock Exchange, with the general index gaining 3.5 percent to close at 2,554.5 points and turnover coming to around 100 billion drachmas again after a long slump. The index thus returned to where it was before the September 11 terrorist strikes in America. Despite the difficult international situation, Sophocleous Street feels that the right conditions may have been created for a revival, hoping that, as in the past, actions in the banking sector may spark a chain reaction throughout the private sector. National’s shares climbed 5 percent yesterday to close at 29.94 euros and Alpha’s rose 8.2 percent to close at 21.70 euros. Pressure? Former Justice Minister Michalis Stathopoulos yesterday testified before a prosecutor investigating his recent claims – carried in the press – that he had been indirectly pressured by government colleagues to intervene in charges brought by prosecutors against politicians. Sources said Stathopoulos told prosecutor Ilias Kolioussis he had been misquoted by the media.