Alpha acquires Eurobank to make biggest Greek bank

Alpha Bank SA, Greece’s third- largest lender, will acquire EFG Eurobank Ergasias SA to create the nation’s biggest lender as the firms seek to ride out a deepening recession and the country’s sovereign debt crisis.

Alpha will offer Eurobank shareholders five new shares for each seven they hold, or 0.714 Alpha shares for each Eurobank share, according to a statement from the banks in Athens on Monday. Alpha Bank shareholders will own 57.5 per cent of the new group, and Eurobank stakeholders 42.5 per cent.

The combined bank will implement a euro 3.9-billion ($5.7 billion) effort to strengthen its finances, including a euro 1.25-billion rights offer, a euro 500-million convertible note to be taken up by Qatari-backed Paramount Services Holding Ltd. and euro 2.1 billion of internal measures, the statement said. That will help give the lender a core Tier-I capital ratio of 14 per cent, even after accounting for writedowns of Greek government bonds, the companies said.

 

“This merger is a decisive step in the strengthening of the private sector economy at a crucial juncture in Greece’s history, demonstrating the ongoing support of leading international investors,” said Yannis Costopoulos, the chairman of Alpha Bank. “I am delighted to welcome Paramount’s increased participation in the enlarged bank.”

The alliance between the two lenders will create a bank with assets of euro 146 billion and 1,300 branches across eight countries. It will be among the top three banks in Romania, Serbia, Bulgaria and Cyprus. Qatar investors, who already have a stake in Alpha, will be one of the main three shareholders, according to the statement.

Alpha Bank rose 30 per cent and EFG Eurobank 29 per cent on the Athens exchange, while competitors also surged. National Bank of Greece SA, the country’s biggest bank, jumped as much as 30 per cent.