Alpha-Eurobank deal formally over!

The upgrade of the new Greek government bonds by Fitch gave the ASE a breath of fresh air, since the short-term payment difficulties are removed with the new loan agreements, while Greek banks gain financing access to the European Bank again with bonds. On the other hand, the upgrade doesn’t automatically or permanently solve the problem, since all factors (EU, IMF, investors) are asking to see signs of progress, so that Greece can get back on the list of targeted markets.

Prices of e.g. bonds rose after the first cold shower on Monday, and this phenomenon may continue if the election result helps. Everyone knows that the foreigners want a government which can continue on the road blazed by the recent Memorandum. As concenrs how, we will see after the elections.

But the problems are not solved overnight, because banks may have to recapitalize, which means finding new investors and capital increases. So today the first news from the banks came, as Alpha Bank revised its final decisions and asked for a revocation of the decisions of the shareholders' meetings, whereby they would proceed with the Eurobank merger. True to the announcements, Alpha Bank had stated that the bond exchange and PSI create new data and an unclear landscape in terms of damage.

Simultaneously however, according to information, with a prior notice the Alpha Bank management had initiated  contacts with foreign companies and investors for a capital increase. President Mr. Kostopoulos held that previous decisions for the merger with Eurobank were not profitable for shareholders and Alpha Bank seeks new allies after the bonds exchange.

On the other hand, Eurobank remained faithful to its announcements about the merger and will now justly blame the other side for breaking up the deal which was approved by the Alpha Bank general shareholders meeting.

It is clear that in the near future, both Alpha and Eurobank, but also e remaining banks, will look for new shareholders in order to make new capital increases. The period will be difficult, since old shareholders will be called upon to pay the fee of bad debts on loans and the losses of the PSI. Until they can implement the capital increases, both banks and the ASE will appear nervous.

New moves

However, Alpha Bank’s decision to seek a revocation of decisions opens the door for the return to new scenarios about a new approach between National Bank and Alpha Bank. Even though we are at a sensitive time, before the elections, it is clear that the administration of the National Bank will attempt to return, even though its current situation does not allow for many options, besides a defensive ring-fencing of each bank against the crisis.

Eurobank: We have been faithful to all agreements made.

Blame for the inconsistency of the Alpha Bank management, which revoked the announcements of general assembliess, is ascribed by Eurobank, underlining that because of the cancellation of the merger, 4 billion euros from synergies are lost.

Specifically, the statement reads: “In a particularly critical juncture for the country and after a successful effort to restructure the debt, the banking system must rise to the occasion and meet its responsibilities to the economy, our shareholders and customers . The joint decision by Eurobank EFG and Alpha Bank to create the 23rd largest bank in Europe, received the green light due to the multiple benefits for both banks and the economy. The intention of the Alpha Bank administration's proposal to revoke the decisions made by shareholders informed on the PSI+ framework, endorsed by all supervisory authorities of the country, leads to a loss of synergies of over 4 billion euros in total present value, based on estimates by shared external consultants. In the meantime, banks are obliged to seek a large-scale reinforcement of their capital base. The general grounds put forth by Alpha Bank do not reflect the current data. Eurobank remained faithful, as is the duty of a credit institution, to everything that was agreed on the level of the Boards and shareholders of both banks, as was done in the past after successive mergers. In any case, Eurobank will continue its successful route and develop its operations with the same sense of responsibility, participating actively in the collective efforts for the restoration of the economy and the return to growth. The interests of the State, shareholders and customers remains the yardstick for our strategic choices”.