Greek banks 'may have to merge'

24 August 2010

Greece's largest banks have been asked to consider merging by the country's finance minister George Papaconstantinou and Bank of Greece governor George Provopoulos.

EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank SA and National Bank of Greece are all due to report their second quarter results in the next seven days, with analysts forecasting an average profit drop of around 60 per cent, reports Bloomberg.

Alexander Kyrtsis, a UBS AG analyst, explained that worsening asset quality and a reliance on the European Central Bank for funding is likely to push the banks towards mergers, which will create larger companies "with more robust balance sheets".

"The resulting entities should have better access to capital markets, deliver synergies and should ultimately be significantly better placed to compete in central and south-eastern Europe," he added.

Earlier this month, Olli Rehn, the economics and monetary affairs commissioner at the European Commission, praised Greece's efforts in tackling its budget deficit in the first half of the year, reported the Financial Times.

By Claire Archer

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