Shareholders approve merger of Attica Bank and Pancretan Bank to create new banking giant in Greece

In a landmark move that could reshape Greece’s banking landscape, Attica Bank’s shareholders have approved the long-anticipated merger with Pancretan Bank. The merger is set to create Greece’s fifth largest lender, positioning it as a formidable competitor among the country’s financial institutions. The deal, which follows months of speculation and planning, is viewed as a strategic effort to stabilize both banks and enhance their financial health following years of economic challenges.

The merger, approved on September 3, 2024, involves a capital increase of €735 million to cover the new entity’s capital needs and drastically reduce the non-performing loan (NPL) exposure from 54% to just 3%. The merger marks a pivotal point for Attica Bank, which has struggled with a high level of bad loans, and for Pancretan Bank, which sees this as an opportunity to scale its operations and improve competitiveness. According to Attica Bank CEO Eleni Vrettou, the merger represents a “historic move” that is expected to bring stability and growth by creating a more robust and competitive banking institution capable of delivering high returns on capital.

A new banking era in Greece

The merger comes at a crucial time for Greece’s banking sector, which has been undergoing significant transformations. The deal aims to create a new banking powerhouse that will support small and medium-sized enterprises (SMEs) across the country. The merger’s strategy centers around traditional banking, including expanding the network to serve a broader range of customers. The newly formed entity is targeting a loan portfolio expansion to €6 billion by 2027, with plans to issue new loans worth €2 billion annually. This expansion is expected to bolster the bank’s market presence and financial stability, providing a much-needed boost to Greece’s recovering economy.

The Hellenic Financial Stability Fund (HFSF), which currently owns 72.5% of Attica Bank, will see its stake reduced to 35% after the merger and capital increase. Thrivest Holding, the primary shareholder of Pancretan Bank, is poised to become a significant stakeholder in the newly formed entity, holding between 50% and 58.5%. This shift in ownership is part of Greece’s broader strategy to re-privatize its banks, which were bailed out during the debt crisis that plagued the country for over a decade.

Merger to boost Greek banking sector competitiveness

The merger of Attica Bank and Pancretan Bank is seen as a crucial step toward boosting competition in Greece’s banking sector. Following the consolidation of the “big four” systemic banks in Greece, this newly formed entity is being billed as the “fifth pillar” in Greek banking. This merger is not just a strategic maneuver for Attica Bank and Pancretan Bank but also a broader initiative to reshape the competitive landscape of Greek finance, encouraging more competition and stability in the market.

Experts believe this move could have ripple effects across Greece’s economy, particularly in the banking sector, which has been slow to recover from the impact of the financial crisis. By addressing its NPL issue, the newly formed bank will be in a stronger position to offer competitive rates and services, potentially challenging the dominance of larger systemic banks. Analysts suggest that the focus on supporting SMEs could play a significant role in stimulating economic growth, which has been a key focus for the Greek government.

Expert opinions on the merger’s impact on the Greek economy

Financial experts view the merger as a strategic move that could encourage more mergers and acquisitions among smaller Greek banks. John Papadopoulos, a banking analyst, stated that this merger represents “a turning point for the non-systemic banks in Greece,” emphasizing that the newly formed entity could become a blueprint for future consolidation in the sector. He also noted that the significant reduction in non-performing loans would help stabilize the bank’s financial standing, potentially increasing investor confidence.

The Bank of Greece approved the merger on August 30, 2024, and the process is expected to be finalized by the end of September. Once the merger is complete, the new entity will focus on expanding its footprint across Greece, enhancing its services to customers, and playing a vital role in the economic recovery efforts.