Greek banks Eurobank and Alpha Bank have recently agreed on a merger which had been announced by the international media last week. The two banks made the official announcement on Monday. In Romania, the merged entity of Eurobank's Bancpost and Alpha Bank will become the third largest bank in Romania, after BCR and BRD, leaving behind Romanian lender Banca Transilvania. The new will also be the biggest bank in South - Eastern Europe.

Eurobank EFG shareholders will receive five new Alpha Bank ordinary shares for every seven Eurobank EFG ordinary shares held, corresponding to an exchange ratio of 0.714 Alpha Bank shares per Eurobank EFG share. Alpha Bank will thus absorb Eurobank EFG, a move which should be finalized by the end of this year.

The new group will be among the top 25 largest Eurozone banking groups with total assets of EUR 146 billion. It will have more than 1,300 branches across 8 countries and top 3 market positions in Bulgaria, Cyprus, Romania and Serbia. In Romania, it will have gross loans of EUR 6.9 billion, the biggest amount of the four mentioned markets.

As part of the transaction, the new group will proceed immediately with the implementation of a EUR 3.9 billion capital equivalent strengthening plan. The plan includes over EUR 2.1 billion of Core Tier 1 capital equivalent internal measures, the issuance (at the same time as the proposed rights issue) of a new EUR 500 million mandatory convertible note to be subscribed for by Paramount and a rights issue of EUR 1.25 billion.

One-off restructuring costs of approximately EUR 450 million are expected to be incurred in order to deliver the planned synergies, according to the banks.

More in the official announcement here.

editor@romania-insider.com