March 2, 2021

DealBook: Alpha Bank and Eurobank of Greece to Merge

Greek bank shares climbed on Monday on news of a merger between Eurobank and Alpha Bank.John Kolesidis/ReutersGreek bank shares climbed on Monday on news of a merger between Eurobank and Alpha Bank.

Two of Greece’s biggest lenders, Alpha Bank and Eurobank, announced plans on Monday to merge, in a move to increase confidence in the country’s beleaguered economy.

The combination will create the largest lender in Greece, with total assets of 146 billion euros ($212 billion). Shares of Alpha Bank and Eurobank rose on the news.

“I am confident that the new combined entity will act as an important agent for the economic development of the country,” Efthymios N. Christodoulou, chairman of Eurobank, said in a statement. “It is also well placed not only to withstand the current economic turbulence but also to create new opportunities and play a pivotal role in the future growth of the region.”

The merger is welcome news for a country in the midst of a sovereign debt crisis.

Owning large swaths of the country’s troubled debt, the Greek banks have found themselves at the center of the mess. As Greek bonds essentially proved worthless as collateral, foreign investors balked at lending to Greek financial firms. With few sources of funds, banks pulled back and credit tightened.

By merging, Alpha Bank and Eurobank are looking to strengthen the capital position of the combined bank and gain necessary heft to weather the crisis. The deal will help bolster the combined bank’s overall capital position, by eventually increasing its buffer to 14 percent. It also signals foreign interest, with the main shareholders including Paramount Services Holding, a prominent family in Qatar.

“This initiative shows that today’s crisis can be an opportunity for structural moves that boost both the financial sector and the real economy,” the Greek finance minister, Evangelos Venizelos, said in a statement on Monday, according to Reuters. “Qatar’s participation sends an international message of confidence in the prospects of the Greek economy.”

The deal, which still has to be approved by regulators, is expected to be completed in mid-December. Citigroup and JPMorgan Chase served as financial advisers to Alpha Bank, while Eurobank worked with Barclays Capital, Goldman Sachs and Rothschild.

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