A Bank yesterday scrapped plans to tie up with rival Eurobank, in what would have been Greece’s largest bank merger in decades but instead became a casualty of the country’s bond restructuring.
Alpha Bank had said in January it would put the merger, agreed in August, on hold until the terms of debt-crippled Greece’s bond swap were finalised.
As Greece’s cabinet unanimously approved the terms of its €130bn international bailout yesterday, Alpha Bank said it had decided to go it alone.
The lenders had initially sought to form the nation’s largest bank to cope with a crisis that has caused rising bad debts and prompted many depositors to take their cash elsewhere.
Their share swap deal looked as if it would hit the rocks when it became clear that the Greek bond exchange – also known as private sector involvement (PSI) – would inflict a bigger hit on their portfolios, and disproportionately on Eurobank, which had roughly double the exposure to Greece’s sovereign bonds.
“The market has known for weeks that this merger effort had soured,” an Athens-based banking analyst said. “Today’s development is them formally pulling out.”
A spokesperson said Alpha Bank’s board will convene a general shareholders’ assembly where it will propose calling off the merger. Alpha’s board meeting is set for 27 March.
“The board will explain to shareholders why the merger is no longer in their interest,” another Alpha Bank official said.