Race track market… with any merger becoming possible!

The Greek market tends to develop into the most speculative market worldwide since after the fiasco of NBG, the new trend is mergers between all possible twins or even trios of banks!

Either there is a serious reason for mergers or some have found a way to maximize their stock revenue.

Yesterday, and while the tear gas stung the eyes of those that dared to go to Syntagma square, a new slapstick comedy was taking place in the stock exchange which has a serious foundation linked with bank bond debt.

The merger speculated upon this time was that of Alpha – Eurobank, resulting in a 7% increase of the latter, while Alpha would get 4-5%. As in the National – Alpha case, the procedure followed by the market is questioning the companies when the exchange amount is unusual. Most of the time in the absence of a trading floor, which was wrongly eliminated, the rumor starts from a phone call that circulates around the market.

In the National’s case, the friendly merger was ready by law in case of an information leak. The buyer is obliged to have the confidentiality agreement, a list of those involved and a proposal for the buy-out. And the news did leak, but the listed companies have another tactic: they say they are discussing it but have not reached an agreement. Then the confirmation of the deal comes late and the revenue is higher for everybody.

The speculation orgy – the essence of the mergers issue

This speculation orgy tends to make the market look like the races, where the investors pick a twin, a trio or a top contender. But because the pairs are banks involving 50-55bil bonds, the Troika is thinking of creating large banks that will be better able to deal with a portfolio restructure.

Foreign houses like the French Chevreux estimate that only 120bil of the debt would have been cut, meaning Greece would save 10-20bil interest rates or 8% of GDP. But the question from a lot of analysts addresses the fact that with a 340bil debt (only part of the memorandum included in it) if it is cut by 30% then it goes to 240-245bil, the same as before the spread rally began.

Then why is there an attempt to drain the blood of the  Greek people with the memorandum? But how else would cheap assets be delivered, if the debt were not unbearable and the society unable to produce GDP through taxes?