The Greek bank rescue fund picked Eurobank to buy New Hellenic Postbank in an all-share deal as part of consolidation in the sector and to meet a condition for the next tranche of Greece's bailout, it said after a board meeting on Saturday.
Athens agreed with its euro zone andIMF backers to sell Postbank (TT) and smaller Proton Bank by July 15 as a condition for the release of more funds from the 240 bln-euro rescue package 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.
In contrast to its slow-moving privatisations agenda, Athens has shown better performance on the banking front. Authorities have met deadlines to stress test and recapitalise the major banks and wind down lenders deemed not viable.
By contrast, targets for state asset sales to pay down public debt have been missed, leading authorities to mark down projected proceeds.
Greece's unsuccessful attempt to sell state gas company DEPA was the latest setback in its privatisations programme that underpins its 240 bln euro EU/IMF bailout.
Goldman Sachs was the fund's adviser on the Postbank 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% of TT but also 93.6% of Eurobank, Greece's fourth-largest lender, after recapitalising it with 5.84 bln euros last month.
On Friday, the HFSF also picked Eurobank to acquire the small lender Proton, which is also fully owned by the fund.
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 4 bln euros into the bank to cover its funding gap – the difference between assets and liabilities – and a further 500 mln to recapitalise it.
Like other Greek lenders, TT was hit by writedowns on Greek bonds and loan impairments in the wake of a debt crisis and deep recession.
The healthy relaunched TT has assets of 13.7 bln euros, deposits of 10.7 bln and a network of about 200 branches. Proton is a much smaller bank with deposits of 1 bln euros and 1.3 biln 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.
