Aug. 29 - Alpha Bank and EFG Eurobank, Greece's second and third largest banks, agreed to merge with a 500 million euro backing from Qatar. Conway G. Gittens reports.
A handshake marks a new era in Greek banking. EFG Eurobank and Alpha Bank, the nation's second and third largest banks, have agreed to a friendly merger, in an attempt to better deal with Greece's massive debt crisis. Alpha Bank President Yannis Costopoulos. SOUNDBITE: ALPHA BANK PRESIDENT YANNIS COSTOPOULOS (GREEK WITH ENGLISH TRANSLATION) SAYING: "We always said the banking system in Greece was too big and something needed to be done so we made the first step, we are creating the largest bank in Greece in the private sector and at the same time the largest bank in southeastern Europe. At the same time we are also raising our status in Europe, we are no longer one of the little guys." A major investment from Qatar will help the two bulk-up. Qatar will invest 500 million euros through a convertible bond, and a 1.25 billion euro rights issue will follow. The merger creates a bank with assets of 150 billion euros and 80 billion euros in deposits, according to Greek banking officials. EFG Eurobank CEO Nikos Nanopoulos says the deal was necessary. SOUNDBITE: EFT EUROBANK CEO NIKO NANOPOULOS (GREEK WITH ENGLISH TRANSLATION) SAYING: "We should understand that it was a difficult and complex agreement that we made which I believe will benefit all of us particularly during this difficult time we are living in." Difficult - as deposits dry up and ratings downgrades threaten debt investments on the books. SOUNDBITE: EFT EUROBANK CEO NIKO NANOPOULOS (GREEK WITH ENGLISH TRANSLATION) SAYING: "We are creating significant capital reserves which we will be able to use in order to face any dangers whatsoever." Shares of Greek banks surged on the news in hopes the deal will spark more mergers in the battered sector. Conway Gittens, Reuters