Greek banks: still standing

Financial Times
September 8, 2011

One thing can be said in favour of Greek banks. Despite the economic slump they are still standing (unlike, say, most of their Irish counterparts). Proof of life, however, cannot conceal the pain wrought by the crisis – lack of capital and liquidity, and reliance on the European Central Bank.

So as the good ship Greece sails towards the iceberg, some passengers have made their own lifeboats. The proposed merger of Alpha Bank and EFG Eurobank must be seen in that light. If the two banks – the second and third largest Greek banks, with a combined market value of €1.7bn – can pull off a €1.25bn rights issue, this particular lifeboat might even float, especially as the merged bank is to get a €500m capital injection from a Qatari investor. The merger is aimed at keeping the banks out of state hands (the only other likely source of new capital). For that reason alone, it deserves to succeed.

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