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DatabankJanuary 3 2013

Rebuilding the Greek banking scene

A series of mergers will change the shape of the Greek banking sector, with three dominant players pulling away from the pack.
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Jan2013-GreekBanks1

Under pressure from the EU, the Greek banking sector is striving to consolidate and reinforce itself after the damage inflicted by five years of recession and two rounds of sovereign debt restructuring in 2012. In most cases, balance sheets will have shrunk significantly during 2012, as bad loans and holdings of government bonds are written down. However, the year-end 2011 asset figures give an idea of the market share that newly combined banking groups will hold.

By far the most dramatic move is the merger of the country’s two largest banks, National Bank of Greece (NBG) and Eurobank. The new entity, which will keep only the NBG name, will create a market leader with end-year 2011 assets of almost $250bn, more than double the size of the second largest bank and approaching a 50% market share. There are more modest market share gains from Alpha Bank’s acquisition of Emporiki Bank from Crédit Agricole, and Piraeus Bank’s purchase of Société Générale’s Geniki Bank and formerly state-owned Agricultural Bank of Greece (ATE).

In the case of ATE, we have not added its end-2011 assets of $35.8bn to the total for Piraeus, because the Greek government is retaining a pool of ATE's non-performing assets as part of the deal. Instead, we have increased the figure for Piraeus by the dollar equivalent of €14.7bn, which the bank disclosed as the value of ATE assets that it will take onto the combined balance sheet.

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Along with NBG, Alpha and Piraeus will pull away from the pack, with assets at Piraeus more than triple those of the fourth largest remaining bank, Cypriot-owned Marfin Egnatia. The size of Greek banks now drops away sharply after Hellenic Postbank, with Attica Bank holding assets of just $5.4bn as at end-2011, and other banks smaller than $5bn. The Greek banking sector had total assets of more than $500bn at the end of 2011. With such substantial consolidation at the top of the banking sector and the extreme economic environment that the country faces, it remains to be seen how many banks with market shares of less than 1% can survive.

NBG will also be a significant player across south-eastern Europe, as Eurobank had market shares in Serbia and Romania that were almost double those of NBG. Meanwhile, the two banks had similar market shares in Bulgaria, pushing the combined entity to almost 19% of banking sector assets in the country. However, even after the merger, the total market share in Romania will be less than 7%, which is below the 10% level that many bankers consider a threshold for sustained profits from a full-service bank in a small market (the population is about 21 million). And the largest market share of the combined bank remains in Macedonia, where Eurobank had no on-the-ground presence but NBG holds almost a quarter of the market. 

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