Greek banks merge, raise funds
Alpha Bank and Eurobank, hit by heavy losses, said Monday they will merge to form Greece's largest lender, backed by fresh cash to restore faith in the debt-hit country's cash-starved banking system.
Trying to stay afloat as the economy shrinks, Greek banks are heavily exposed to their own government's bonds and Alpha Bank accordingly took a charge of 539 million euros to post a first half net loss of 525 million euros.
Eurobank, which failed a European bank stress test this year, had a loss of 588 million euros, highlighting the need for the new entity's 3.9-billion euro ($5.7-billion) capital increase which will be led by a Qatari fund.
"The boards of directors of Alpha Bank and Eurobank EFP announce that they have reached agreement on a combination of Alpha Bank and Eurobank EFG," the banks said in a joint statement.
"We are announcing a marriage today, it creates the biggest bank in Greece," said Alpha Bank chairman Yannis Costopoulos, who will head Alpha Eurobank.
Greek stocks soared nearly 15 percent on the day, led by the banking sector as investors welcomed a rare bit of good news after Athens had to seek a second international debt bailout in July.