The Costopoulos-Latsis meetings that produced the deal

The two bank heads decided on the merger of two Greek banks, Alpha and EFG Eurobank, after two decisive meetings between them took place, one in Qatar and the other in Switzerland, and of course under the great and pressing weight of the negative developments in the Greek crisis.

The deal will form the biggest bank in southeast Europe, and will help the two lenders avoid turning to a state liquidity support mechanism.

The new status is expected to help things in the local economy and transform the banking picture.

Qatar’s role will be definitive and the country will be holding the biggest share, 20%. The second greatest shareholder will be the Latsis family, while the third will be the Costopoulos family.

Yannis Costopoulos will be the president of the new formation. Leading figures from Alpha bank such as Filaretos,  Theodoridis and Aronis will also take part in the leadership.

Although it will have the valuable Qatar capital at its disposal, the course of the new mega-bank will not be smooth as it will need to deal with three issues:

1.    The haircut of the bonds in its hands because of its participation in the rollover of the Greek debt. Greek bonds are up to 12-13 billion euros.

2.    The pound of the privileged shares of the Greek state that cost around 2 billion euros. For this, there is time until 2013 while, in any case, the bank will have to pay the Greek state 200 million euros in interest, in full, every year.

3. The closure of many of its branches.

The final announcements will take place today after the boards of the two banks conclude their meetings. After the closure of today’s ASE, the two banks will make relevant announcements concerning their results for the 6 months ahead.

Reuters speaks of 7 Eurobank shares for every 5 of Alpha Bank, and characteristically mentions that “Alpha Bank has a market capitalisation of 1.068 billion euros and Eurobank a market capitalisation of 1.017 billion euros.