Piraeus Bank is negotiating with the National Bank of Greece (NBG) group over a potential merger into United Bulgarian Bank, owned by NBG, according to media reports.
Neither Greek lender has commented on the reports of the Greek news website Euro2Day, which was also quoted by the Bulgarian mass circulation daily 24 Chasa (24 Hours).
If confirmed, this would make Bulgaria the first southeastern European market to feel the effects of Greek banks responding structurally to the crisis.
The move would come after Postbank, a subsidiary of Greece’s Eurobank operating in Bulgaria, announced in mid-July that it was taking over the Bulgarian branch network of Greek lender Alpha Bank.
Currently four Greek banks, including Eurobank and Alpha Bank, control around a fifth of Bulgaria’s banking assets, which has raised concerns of contagion from the Greek crisis.
Unlike Alpha Bank Bulgaria, (which is a branch of Greece’s Alpha Bank and operates under the supervision of Greek banking authorities), the other Greek lenders run subsidiaries, which are supervised by Bulgaria’s Central Bank.
If both deals are closed smoothly, only two banks, Eurobank and NBG, will remain in the Bulgarian market.
Greek banks are under pressure from the European Commission to focus on the domestic market and limit their foreign exposure.
Most suffered steep losses for the third day in a row on Wednesday, with Alpha Bank and Piraeus Bank effectively down to the 30 per cent loss level at which trading in their shares is halted.
After the flight of euros from deposits in the past months and mounting loan impairments, banks in Greece are in dire need of recapitalisation.
When it comes, analysts suggest recapitalisation will hurt existing shareholders.
Sources: Kathimerini/Reuters