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Troika requests Greece stop merger of banks
Aggregated Source: Shanghai Daily: Business

GREECE'S international lenders have asked Athens to halt National Bank's takeover of rival Eurobank, worried that the resulting lender would be too big for the state to deal with, two bankers close to the talks said on Saturday.

The lenders' concerns come as an unexpected twist in the takeover deal, which was launched in October and completed with a share swap. The two banks have already begun integrating operations after getting approval by authorities.

National Bank, Greece's biggest lender, took over 84.3 percent of Eurobank in February via a share swap as the banking industry consolidates to cope with the fallout from the country's debt crisis and a deep recession.

The European Union, European Central Bank and International Monetary Fund "troika" had raised issues over the size of the merged entity relative to Greece's gross domestic product and the banking sector as a whole, the sources said.

The combined NBG-Eurobank group would have assets of 170 billion euros (US$218 billion), almost the size of the country's 190 billion-euor GDP and 36 percent of total deposits.

"Pretty much these are the arguments put forth by the troika," one of the bankers said, declining to be named.

NBG had offered 58 new shares for every 100 shares of Eurobank in the deal.

The lenders' concern comes as fellow eurozone member Cyprus reels under a banking crisis that has forced it to shut down its second largest bank, Cyprus Popular Bank, also known as Laiki, and make an unprecedented raid on deposits over 100,000 euros as part of an EU-IMF bailout.

The European Commission, the government and the banks had no comment on the NBG-Eurobank deal.

An NBG official said the bank had no plans to alter course.

"NBG is going ahead with the legal merger process to absorb Eurobank, which has been approved by Greek and European authorities. Our goal is to complete the process by June," an NBG official said, declining further comment.

Newspaper Kathimerini reported on Saturday the troika's request that the merger be cancelled was a "red line" for the government since the tie-up is now on its final stretch. But, it said, officials were optimistic the concerns would be resolved.

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