Greece's Eurobank, Alpha Bank in merger deal

Greece's second and third largest banks, Eurobank and Alpha Bank, are set to announce on Monday a merger deal to better cope with a severe sovereign debt crisis and recession, banking sources said on Saturday.
The expected deal, which would create the biggest bank in southeast Europe by assets, will help the two lenders avoid turning to a state liquidity support mechanism and is likely to spark more reshuffling in the country's banking sector, analysts said.
"The boards of the two banks will sign the deal early on Monday and the announcement and a press conference will take place at around midday," a banking official close to the deal told Reuters.
Troubled by rating downgrades, deposit outflows and loan impairments in the wake of the country's worst recession in four decades, Greek bank shares have tumbled more than 55 percent in the year to date.
"The deal is about a friendly merger between Alpha Bank and Eurobank, with the participation to a significant extent of the Qatar Investment Authority," a senior banker at Alpha Bank told Reuters.
The new entity will have assets of 150 billion euros ($211.3 billion), 8 million clients and 80 billion euros of deposits, said a third banking official, adding that the banks were very close to a deal.
The Qatar Investment Authority, which is already a shareholder in Alpha, will become a major shareholder in the new group, the officials said. Another banking official said the Gulf Arab state had signed the deal on Saturday.
Analysts welcomed news of the deal between Eurobank, which failed the latest EU-wide bank stress test, and Alpha, saying it could help the two lenders weather the crisis.
"This is a strategic move in the right direction that will protect the two banks from the worst that is ahead for the Greek banking sector," said Takis Zamanis, chief trader at Beta Securities.
"Qatar will probably inject money into the new entity at a time when Greek banks are facing lack of liquidity, losses from the PSI (private sector involvement in the bond swap) and rising loan impairments," he said. "The two banks may avoid asking liquidity from the existing support mechanism."