The second NO by Giannis Kostopoulos

Before the dust has settled in the startled market on the proposal about a friendly merger between the National Bank of Greece and Alpha Bank, the latter gave a simple and unequivocal statement unanimously rejecting the tempting, and for many generous proposal by Tamvakakis to the shareholders of Alpha.

The negative response reminded everyone of the first failed attempt to create a national champion in Greece in late 2001, when Theodore Karatzas and Giannis Kostopoulos had a joint press conference, presenting not only the agreement but also the logo of the new bank.

Yesterday’s turn οf events just confirmed that history can sometimes be repeated as farce, but in circumstances such as those our country is going through, the consequences can be vast and extremely negative, and the critical situation leaves no room for tricks.

The background
The proposal of the National Bank about a friendly merger with an exchange ratio of 8 NBG shares for every 11 AB shares., which represents a premium of 23% - 24%, is deemed attractive by the market. The fact that NBG picked up speed in Wall Street, while the rest of the bank shares in Athens increased like crazy, shows the thirst of the market for large movements that might create a positive climate, as well as revealing the market’s take on the proposal.

However, AB says that the problem lies in the exchange relationship which, according to the bank’s statement, was deemed disadvantageous for its shareholders.

According to unconfirmed information, an improvement to the proposal that would raise the premium for Alpha shareholders by 10% might bridge the gap. In such a case, however, it is uncertain whether the NBG shareholders will be happy since they were called upon to take part in the recent share capital increase of the bank at 5,20 euro per share.

Many who were involved in the previous super deal wreck a decade ago, attribute the new failure to claims of persons and positions, but this is exactly why AB leaked that there is no disagreement or objections to the proposed organization chart by NBG.

Nationalization? But the State is present!
Meanwhile, A. seems reluctant because the merger practically means nationalization for them, in an environment of high uncertainty due to the recession.

Government circles, however, meaningfully reiterated that the Greek government is currently a shareholder in all Greek banks. So in a broad sense the question of nationalization already exists. In the case of AB, this translates to 950mil worth of direct state participation via preferential shares and 9bil euros of Greek government securities to pump liquidity from the ECB.

To the point, NBG were dumbfounded when reading the unanimous rejection of their proposal and according to sources close to administration, responded that they will not enter a “bargain” and declared themselves ready to further discuss the rejected proposal by AB.

It is obvious that we are missing something…