ATHENS, Greece — A proposed merger between two of struggling Greece’s main banks quickly fell through late Friday after Alpha Bank rejected the terms offered by its biggest competitor, National Bank of Greece.
An Alpha Bank statement said its board unanimously rejected the “unsolicited” National Bank of Greece offer after exploratory talks. National Bank of Greece had no initial comment on the decision, or on whether it would table a follow-up offer.
“The board ... resolved to reject [the proposal], taking into account the uncertainties of the current environment, and the terms of the proposal itself, which were not deemed beneficial to the Alpha Bank shareholders,” said Alpha Bank, which is Greece’s No. 3 lender by assets.
National Bank of Greece’stakeover bid earlier Friday had sparked a market rally and drew quick praise from the debt-ridden country’s government. National Bank of Greece said it had proposed that Alpha shareholders receive eight new National Bank shares for every 11 outstanding Alpha shares.
“The proposed merger would create the leading bank in Greece which we believe would be pivotal in supporting the recovery of the Greek economy,” National Bank of Greece chairman Vassilis Rapanos said.
A proposed merger between the two banks in late 2001 also fell through.
News of the National Bank proposal had prompted a bank-led bull run on the Athens Stock Exchange, and the benchmark general index closed 3.16 percent stronger, at a six-month high of 1,715.13 points.
Analyst Manos Chatzidakis said that while it remained unclear whether the deal was dead, the proposal had opened “the threshold of a new era” for the local banking sector.
“I believe that at some point ... we will find ourselves looking at much larger banking organizations, with greater capital assets and guarantees with which to face [a] crisis like the current one,” he said. “In a year from now, the scene will be completely different.”
Chatzidakis, who is head of investment strategy at Pegasus Securities, said a merger between National Bank of Greece and Alpha could still be on the cards “at some future point when the need is more pressing and the price is better.”
“My understanding is that Alpha said ‘not at this price’; they didn’t say ‘we will not sell,”’ Chatzidakis said.
After years of profligate government spending, Greece was saved from insolvencylast year by a loan package, which will extend through mid-2013, from its European partners and the International Monetary Fund.
In return, the Socialist government cut pensions and salaries while raising taxes and retirement ages to tame the budget deficit to manageable levels by 2014.
While, unlike fellow bailout beneficiary Ireland, Greece entered the crisis with a healthy banking sector, the state of the economy has turned the screws on lenders’ funding flows and officials have repeatedly urged further consolidation through mergers.
“The government encourages such initiatives, which are intended to strengthen the banking system and [to assist] a speedier exit from the crisis,” Finance Minister George Papaconstantinou said Friday, before Alpha rejected the deal.
Business, Pages 24 on 02/19/2011