ATHENS (Reuters) - Greece’s Piraeus Bank (BOPr.AT) has struck a preliminary deal to buy French lender Societe Generale’s (SOGN.PA) loss-making Greek unit Geniki GHBr.AT to strengthen its position amid a brutal debt crisis, two sources close to the talks told Reuters.
Both sides had confirmed in late August that talks on a deal were at an advanced stage as Greece’s battered banks rush to consolidate amid the debt crisis and French lenders try to cut their exposure to the debt-laden country.
“There is a preliminary agreement between the two sides,” a source close to the negotiations told Reuters. The sources did not disclose any potential terms of the deal.
“I expect that it will take one or two weeks for the banks to have the necessary approvals.”
A second banking source confirmed the initial deal and said it would require the blessing of Greece’s bank bailout fund, the Hellenic Financial Stability Fund.
“The two banks have reached a preliminary deal on Geniki,” the source said. “Once numbers are finalized, it will need the approval by the HFSF.”
Societe Generale and Piraeus declined to comment.
Societe Generale and Credit Agricole - the only foreign lenders with a significant presence in Greece - are looking for a way out as the near-bankrupt country’s outlook remains bleak and their loss-making units require continued funding. Fears of Greece exiting the euro have also weighed.
Analysts say the deals herald a long-awaited mergers and acquisition wave in the Greek banking sector, with state-controlled Hellenic Postbank expected to be among the next targets.
Hammered by a deep recession and rising loan impairments, Greek banks have been forced to rely on the central bank for liquidity as access to interbank markets and the European Central Bank remains shut.
The deal also follows Piraeus’s agreement to take over the healthy part of state lender ATEbank AGBr.AT.
Geniki, bought by SocGen in 2004, lost 66.3 million euros ($83.3 million) in the first three months of the year versus a loss of 98.6 million a year earlier. Its losses rose to 796 million in 2011 from 411 million in 2010.
Greece’s economy is projected to enter its sixth year of recession next year as government austerity measures to cut deficits and secure continued international funding take their toll.
Greece relies on the troika of the European Commission, the European Central Bank and the International Monetary Fund for aid to avoid bankruptcy.
Reporting by Lefteris Papadimas and George Georgiopoulos, writing by Deepa Babington. Editing by Jane Merriman and Andrew Hay