Alpha Bank and Eurobank EFG, respectively the second- and third-largest banks in Greece, have agreed to merge, creating a financial services banking group spanning eight Southern European countries.
The deal is expected to play a vital role in the economic recovery of Greece, the banks said in a joint statement. Stock in the two banks, as well as other Greek banks, shot up upon news of the merger Monday, and the Athens Stock Exchange General Index was up 15% by mid-afternoon.
Eurobank EFG provides sub-custody in a number of markets in the region and is a top rated provider in Greece in the Global CustodianAgent Banks in Major Markets Survey. Alpha Bank offers sub-custody services in Greece.
The banks received a 500 million capital injection by Paramount Services Holding Limited, the investment fund of a prominent Qatari family, making that the largest shareholder in the merged group with a 17% stake. Alpha shareholders will own 57.5% of the merged group and Eurobank shareholders 42.5%, with five new Alpha shares representing seven Eurobank ordinary shares.
The board of directors and the executive committee of the merged group will be chaired by Yannis Costopoulos, the grandson of the founder of Alpha Bank whose family will be one of the largest shareholders in the new group, and the management team will be led by two co-CEOs, Demetrios Mantzounis (in charge of control and central functions) and Nicholas Nanopoulos (in charge of business functions).
I am delighted that Alpha Bank and Eurobank EFG have agreed to come together and create the Greek bank of reference and a significant new force in European banking, Costopoulos says. At a time when it is hoped Greece will experience the first signs of a recovery through the implementation of reforms and the support of its European partners, the new bank will aim to contribute to the resumption of growth in Greece and our countrys connectivity with its neighboring markets in Southeastern Europe. This merger is a decisive step in the strengthening of the private sector economy at a crucial juncture in Greeces history, demonstrating the ongoing support of leading international investors. Finally, I am delighted to welcome Paramounts increased participation in the enlarged bank.
The banks together had pre-provision income of 2.6 billion on a pro forma basis last year, and expect pre-tax synergies of approximately 650 million over the next three years.
I welcome the proposed merger and the participation of Paramount as it creates a new Greek and regional banking champion, combining a strong capital base and a talented and committed management team with extensive complementary skills and capabilities, says Efthymios Christodoulou, chairman of Eurobank EFG. I am confident that the new combined entity will act as an important agent for the economic development of the country. 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.
In addition to their native market, Alpha Bank is present in Cyprus, Romania, Bulgaria, Serbia, Ukraine, Albania, the former Yugoslav Republic of Macedonia and United Kingdom, and Eurobank EFG is present in Romania, Bulgaria, Turkey, Serbia, Ukraine, United Kingdom, Luxembourg and Cyprus.
The merger, subject to approval by regulators and competition authorities, is expected to be completed by November.
(CG)