NBG CEO says mergers can strengthen Greek banks

Mergers are the only way to rebuild debt-laden Greece's banking system, the chief executive of the country's biggest lender, National Bank (NBG), said on Thursday, in a boost to consolidation prospects.
Shut out of wholesale funding markets because of the country's sovereign debt crisis, Greek lenders have been urged by the government to explore tie ups to form bigger entities in hopes of breaking the impasse.
"Mergers are a one-way street to restore the credit system," NBG's CEO Apostolos Tamvakakis said in a speech. "The country needs strong banks, which will remain Greek."
NBG's surprise takeover bid for peer Alpha Bank earlier this year re-energised bank shares but the deal fell through and merger talk has since died down with persisting fears of a debt restructuring pounding the sector.
Despite Alpha's rejection of the all-share offer in February, NBG remains convinced that a merger deal with Greece's third-largest lender could help prop up the banking system and improve access to interbank funding.
"Debt restructuring, a haircut, is not an option because it would mean the country's destruction, taking Greece decades back. Such discussion does no good," Tamvakakis said in a speech to business people in the northern city of Ioannina.
"What we must do is redouble our efforts to meet fiscal adjustment targets and reform the country's economy," he said.
European Central Bank lending to the country's banks almost doubled last year to 97.67 bln euros. Funding fell 4.2% in February to 90.44 bln euros or about 18% of their assets.