Eurobank, Alpha Bank to swap shares for merger; Qatar involved

Greece's EFG Eurobank and Alpha Bank will swap shares and seek a 1.75 bln euro ($2.5 bln) capital boost in a merger deal to be announced on Monday, bank officials said, in a move to be stronger to face the sovereign debt crisis.
The friendly merger, if approved by shareholders, will help the country's second and third-largest lenders weather a crisis in which the banking sector has been weakened by rating downgrades, deposit outflows and increasing loan impairments.
"The two banks will merge by exchanging shares and then a rights issue will follow. The rights issue will be in cash," the Eurobank official told Reuters.
The share swap ratio is seven EFG shares per five Alpha shares, a banking source told Reuters on Monday.
The boards of EFG Eurobank and Alpha are meeting on Monday to clinch a deal that will form the largest lender in southeast Europe. Greek banking officials announced the deal on condition of anonymity on Saturday, saying the boards of the two banks would sign on the terms of the merger on Monday, with the Qatar Investment Authority set to become a major shareholder via a rights issue.
The rights issue will amount to 1.25 bln euros and come with a 500 mln euro convertible bond, another banking official involved in the deal said.
The government and Central Bank Governor George Provopoulos have long encouraged the country's banks, which are shut out from the interbank market and depend on ECB funding, to merge to be stronger to face Greece's worst recession in four decades and the impact of the debt crisis.
Greek banks are the biggest private holders of the country's 300 bln euro-plus debt, with a combined government bond portfolio of about 40 bln euros.
The country's banking index has fallen more than 55% since the beginning of the year and more than 76% since the start of 2010, when the debt crisis that forced Athens to seek an EU/IMF bailout erupted, sending shockwaves throughout the euro zone and global markets.
Eurobank shares have lost 78% since the beginning of 2010 and Alpha 77%.
The Latsis family, a major shareholder in Eurobank which made its fortune in shipping, and Alpha Bank Executive Chairman Yannis Costopoulos will also participate in the rights issue, the Eurobank official said.
"The president of the new bank will be the president of Alpha Bank, Yannis Costopoulos, and it will have two CEOs, Nicholas Nanopoulos (currently EFG CEO) and Dimitris Mantzounis (currently Alpha CEO)," the official said.
Alpha Bank has a market capitalisation of 1.07 bln euros ($1.5 bln). Eurobank, which failed the latest EU-wide bank stress test, has a market capitalisation of 1.02 bln.
The merger, if approved, will create southeast Europe's biggest bank and the 22nd-biggest bank in Europe, a banking official said.