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Upgraded, yet still privatizing timidly

News of the merger between National Bank of Greece and Alpha Bank boosted the Greek stock market. But the fact that NBG will remain part state-owned underlines the centre-left government’s lukewarm commitment to privatization. So despite an upgrade from emerging-market status and full entry into euroland, Greece still hasn’t quickened the pulse of investors.

Expansionist ambitions: the CEOs of Alpha Bank
and NBG announce their merger

Early in November Greece's two largest banks, National Bank of Greece (NBG) and Alpha Bank, announced that they were in advanced merger talks. Immediately the comatose Athens General Index woke up with a start. Other bank shares led the rally, with speculative appeal suddenly injected into Commercial Bank of Greece (CBG) and EFG Eurobank. Equity investors had apparently decided that these banks must also join up if they were to survive.

This is refreshing. Not so long ago consolidation talks in Greece's banking industry sparked outright hostility. There were shameful scenes in June 1998 at the Divani Caravel Hotel in Athens during a shareholders' meeting to discuss the sale by CBG of a stake in Ionian Bank. CBG's chairman was forced to depart via a back door, his suit in tatters.

The impetus for a marriage between NBG, a partly state-owned venture, and private-sector Alpha Bank came in the early summer.

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