April 08 - Two of Greece's biggest banks face nationalisation after failing to attract private investment and a surprise move by the state to suspend their merger deal. Sonia Legg reports
They were already struggling, now two of Greece's biggest lenders National Bank and Eurobank are facing nationalisation. Shares in both fell up to 30 percent after they admitted they may not be able to raise enough money via share offerings from the market to stay private As a result Athens' banking index slid almost 17 percent before recovering ground later. Theodore Krintas is MD of Attica Wealth Management in Athens. (SOUNDBITE) (English) MANAGING DIRECTOR OF ATTICA WEALTH MANAGEMENT DR. THEODORE KRINTAS, SAYING: "The markets are worried mainly because of the uncertainty element that was injected once again by the new decision, and now they don't exactly know what to expect for the future." A state bank support fund provides most of the capital the banks need in Greece. The two banks admission that they can't raise the remaining 10 percent has made investors nervous. A planned merger has also been suspended after concerns from Greece's international lenders. (SOUNDBITE) (English) MANAGING DIRECTOR OF ATTICA WEALTH MANAGEMENT DR. THEODORE KRINTAS, SAYING: "They feel a little bit more uncomfortable if they let it merge and they build a huge banking institution within Greece that would be quite more difficult to sell in a second or a third stage. And at the same time if you set up a banking institution with 40 or 50 percent market share, what you could expect is that this market share would go down more than up." National Bank acquired almost 85 per cent of Eurobank via a share swap in February as the banking industry struggled with the fallout from the debt crisis. It will now be up to the support fund to decide when - or if - it can absorb the rest. .