NBR SPECIALISTS, SPEAKING ABOUT THE EFFECTS OF A POSSIBLE MERGER BETWEEN THE FOUR MAJOR GREEK BANKS: "Romanian banks with Greek capital will become a single entity"

The four Romanian banks with Greek shareholders would become a single entity, if their shareholders decided to merge, specialists from the NBR told us.

The statement comes as a result of some statements made by European officials and quoted by Reuters, that some of the biggest Greek banks may be closed and merged with other more powerful financial institutions, a move which would be a restructuring of the banking sector, following any economic plan to save the country.

Also, sources from the Romanian banking sector, claim that a merger between the Romanian banks with Greek shareholders is not mandatory, even if their parent banks decided to make such a move. The way things will happen in Romania will depend on the negotiation of the strategy at the level of the Greek banking groups.

NBR specialists told us: "First of all, this process, if it gets done, will take a long time. But, if the four banks Greek banks present in Romania merge, the same thing will happen to their subsidiaries, proportionally with their Greek stake. In other words, we will be dealing only with a single bank, which will have a single shareholder, (the new Greek entity), one chairman and fewer employees. Of course, in such a scenario, we will also see lower competition in the market, but the new bank will still be subject to Romanian regulations".

Our sources wanted to clarify, however, that in this troubled period, people who are more or less involved make speculations every day.

Yesterday, one of the European officials said that the four major Greek banks - National Bank of Greece, Eurobank, Piraeus and Alpha Bank (all of which have subsidiaries in Romania) - could become two. "The Greek economy is in ruin. That means that banks need a reboot", according to the quoted source, which stressed that prompt action will be necessary in the event of any bail-out between Athens and the Eurozone, adding that Cyprus could be a model in that regard.

Another official said that even though the mergers of banks are necessary, that measure would be a process that could take a long time.

Ever since autumn last year, there have been rumors circulating in the Romanian market that talks concerning the merger between Bancpost and Piraeus Bank or Banca Românească had taken place.

Banking market sources told us, at the time, that the financial institution that would acquire Bancpost would be designated following the decisions made at the level of the parent banks, headquartered in Athens.

In the beginning of October 2014, the press wrote that Piraeus Bank was considering acquiring Bancpost from Eurobank, in exchange for selling its Bulgarian subsidiary or those in Bulgaria and Serbia together.

According to a scenario presented in a reorganization plan drafted upon the request of the General Competition Department of the European Commission, the Piraeus plan proposes for the Greek banks to consolidate their Balkan operations through exchanging branches, in order to reach critical masses on those respective markets, as written on October 8th by Greek portal Sofokleous10.

At the time, Piraeus representatives were saying that the operations in Romania, Bulgaria, Albania and Cyprus were viable and of strategic importance for the group.

The Greek press had written, a few days earlier, that Banca Românească, the subsidiary of National Bank of Greece (NBG), the biggest bank in Greece, was for sale.

The four major Greek banks - Eurobank, Piraeus, Alpha and NBG - have not yet succeeded in merging, even though in the past, a merger agreement was signed between Eurobank and NBG, which was later cancelled, in the beginning of last year.

International financial institutions which have saved Greece and the Greek banks from default have allegedly asked for the agreement in question to be terminated, due to fears that the bank resulting from the deal would be hard to save if the situation in Greece worsened.

Press sources also wrote that the battle between Eurobank and NBG would happen over occupying the strategic position in Romania, as Bancpost is the most important foreign subsidiary of Eurobank, with a market share of almost one third of the group's assets, namely 3.9 billion Euros.

According to Greek publication Kathimerini , in July 2013, the representatives of Greece's foreign creditors have asked commercial banks to sell their subsidiaries and affiliated banks in South-Eastern Europe.

In the context of the situation in Greece, the management of the National Bank of Romania has lately sent reassuring messages concerning our Greek capital banks, saying that they have very high solvency and liquidity and that the Central Bank was willing to offer them support if necessary, as a lender of last resort.