The second and third largest banks in Greece are going to merge.
You can picture two tired, punch-drunk boxers leaning up against each other to make it through the last round…or you can picture capitalism and pragmatism taking root in the storm. I guess it depends on how much your parents loved you as a child in terms of which way you’d like to look at this…
EFG Eurobank Ergasias SA and Alpha Bank SA, Greece’s second and third-biggest banks, plan to merge in a bid to bolster their assets and ride out a deepening recession and the country’s sovereign debt crisis.
The boards of both institutions will meet tomorrow to approve the terms of the friendly deal, one person with knowledge of the matter said yesterday, declining to be named because the talks are still confidential. The meetings, and plans for a news conference tomorrow, were confirmed by another person, who also declined to be named.
The alliance between the two lenders would create Greece’s biggest bank with assets of 150 billion euros ($217 billion), more than 2,000 branches and about 80 billion euros in deposits. Qatar private investors, who already have a stake in Alpha, will participate in the new entity, according to one of the people.
We all know that this does little to fix the system or change the amount of debt that’s crippling economies like Greece, but still, this will be taken as a positive for the markets Monday. Perhaps it will even be seen as a roadmap for besieged banks around the continent to start playing offense and finding ways to get stronger.