ATHENS: Greece’s bank rescue fund picked Eurobank to buy New Hellenic Postbank as part of consolidation in the sector and to meet a condition for the next tranche Greece’s bailout, it said after a board meeting yesterday.
Athens agreed with its euro zone and International Monetary Fund backers to sell Postbank (TT) and Proton Bank by July 15 as a condition for the release of more funds from the ¤240bn rescue keeping Greece afloat.
The sale is the latest move in a consolidation of the battered banking sector that aims to form stronger, well-capitalised banks to fund the economy out of its six-year slump.
The Hellenic Financial Stability Fund (HFSF), the rescue vehicle set up to recapitalise Greece’s major lenders, said it aimed to sign a binding agreement with Eurobank on Monday, without providing further details.
Goldman Sachs was the fund’s adviser on the sale. Alpha Bank, National Bank and Piraeus Bank’s Geniki unit had also bid to acquire TT. HFSF was effectively selling TT to itself as it owns not only 100 percent of TT but also 93.6 percent of Eurobank, Greece’s fourth-largest lender, after recapitalising it with 5.84 billion euros last month.
On Friday, the HFSF also picked Eurobank to acquire the small lender Proton, which is also fully owned by the fund. A Eurobank executive who declined to be named told Reuters that the bank’s offer involved shares, not cash.
Authorities wound down TT in January after efforts to sell it failed. They stripped out bad loans from its portfolio and transferred less risky assets and deposits to a new entity called New Hellenic Postbank. The bad loans are being sold.
The HFSF pumped ¤4bn into the bank to cover its funding gap — the difference between assets and liabilities — and a further ¤500m to recapitalise it. Like other Greek lenders, TT was hit by write-downs on Greek bonds and loan impairments in the wake of a debt crisis and deep recession.
The healthy relaunched TT has assets of ¤13.7bn, deposits of ¤10.7bn and a network of about 200 branches. Proton is a much smaller bank with deposits of ¤1bn and ¤1.3bn in assets.
The acquisition of TT improves Eurobank’s liquidity profile and its reprivatisation prospects, adding to doubts on whether a suspended merger with its peer, National Bank (NBG), will go ahead.
“As far as the troika is concerned, the merger is dead. The tie-up of TT with Eurobank is the optimum combination. It adds to the value of Eurobank in the HFSF’s portfolio in view of its reprivatisation,” the Eurobank executive said.
In April Greece’s international creditors blocked the plan to merge Eurobank with NBG on fears that it would become too big. Last month, Eurobank’s new CEO said the bank must follow an independent course.
Reuters
