The merger of Alpha Bank and EFG Eurobank - cancelled

• Yannis Costopoulos: The high capital requirements would have led to the nationalization of the entity resulting from the merger

The shareholders of Alpha Bank yesterday decided to revoke the merger with EFG Eurobank.

At the Extraordinary General Shareholder Meeting of Shareholders of Alpha Bank, which took place yesterday in Athens, it was decided to terminate the approval of the operations and of the procedure to merge with EFG Eurobank by absorbing it, the revocation of the decisions of the General Shareholder Meeting of Alpha Bank of November 15th, 2011 and the disengaging of all the contractual obligations to or in favor of "EFG Eurobank".

The approval of the merger comes after several general shareholder meetings failed to meet the quorum needed to vote on the agenda.

Yannis Costopoulos, the CEO of Alpha Bank, told the shareholders that after the restructuring of the Greek debt, the merger was no longer beneficial for the bank.

He said: "In August 2011, the circumstances justified a merger. But after the participation in reducing the debt of the state, the merger was no longer in the interest of the shareholders of Alpha. (...) It was not a matter of stock conversion. The new entity was supposed to raise about 9 billion Euros in funding. Under the current circumstances, as CEO, I couldn't make such a proposal to shareholders".

The high capital requirements would have resulted in the nationalization of the entity created after the merger, because the amount couldn't have been raised from the financial markets, Yannis Costopoulos said.

The merger agreement stipulated a conversion rate of five shares of Alpha Bank for each seven shares of EFG Eurobank.

There are expectations that both Greek banks will participate in an 18 billion Euros recapitalization of the Greek banking system, part of the foreign aid agreement of 130 billion Euros.

On November 15th, 2011, EFG Eurobank and Alpha Bank decided to merge, and the resulting bank would have become the largest in Greece. The finalization of the agreement concerning the conversion of the bonds, concluded between the Greek state and its private creditors, has caused banks to lose more than they expected, when the merger between the two banks was decided.

As early as March, Alpha Bank has expressed its intention to summon the General Shareholder Meeting, in order to abandon the merger with EFG Eurobank, due to the impact of the restructuring of Greek debt.

The potential loss resulting due to Alpha Bank abandoning the merger with EFG Eurobank is about 4 billion Euros, according to the calculations of the outside consultants of the two banks.

Last year, Alpha Bank reported a loss of 3.81 billion Euros, due to the restructuring of the Greek debt, and to the increase in provisions, whereas EFG Eurobank had a loss of 5.5 billion Euros.

EFG Eurobank owns Romanian bank Bancpost, whereas in Romania, Alpha Bank operates under its own brand.