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Eurobank, NBG shares fall on recapitalisation jitters

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(Globalpost/GlobalPost)

ATHENS (Reuters) - Shares in Greek lenders Eurobank <EFGr.AT> and National Bank <NBGr.AT> fell on Tuesday on concerns their integration following their takeover deal this year may be stalled by objections from the country's international lenders.

National acquired 84.3 percent of Eurobank via a share swap last month with a view to integrate it in the group and form the country's largest bank.

But the European Union, European Central Bank, International Monetary Fund "troika" is concerned the plan would form a bank too big relative to the country's gross domestic product (GDP) and want Eurobank to be run as a stand-alone subsidiary of NBG.

Eurobank shares fell more than 9 percent to their lowest level in two decades while National Bank shares fell more than 7 percent in afternoon trade. Both underperformed the Athens bourse's banking index <.FTATBNK>, which fell 5.4 percent.

"There are concerns over National Bank's integration of Eurobank and how Eurobank will be recapitalised," said an Athens-based trader who declined to be named.

Together, the two banks need 15.6 billion euros (13.18 billion pounds) of fresh capital to shore up their solvency ratios to levels required by the country's central bank after incurring losses from a sovereign debt write-down and impaired loans.

National (NBG) has said it has not been formally notified to halt the plan and has begun the integration process. The rationale behind NBG's takeover was to absorb Eurobank into the group to generate substantial cost savings.

Greece' top four banks - NBG, Alpha <ACBr.AT>, Eurobank <EFGr.AT> Piraeus <BOPr.AT> - need 27.5 billion euros to be recapitalised by the end of May, the central bank has said.

Most of the fresh capital will be provided by a state bank support fund - the Hellenic Financial Stability Fund (HFSF) - in exchange for new shares and contingent convertible bonds.

To stay private, banks must ensure that at least 10 percent of their share offerings is taken up by private investors, otherwise they will fall under control of the HFSF.

"If there two banks are recapitalised separately and Eurobank fails to meet the minimum private sector take-up, then National Bank's 84 percent stake stands to be severely diluted," said an analyst who declined to be named.

(Reporting by Angeliki Koutantou and George Georgiopoulos; Editing by Louise Heavens)

http://www.globalpost.com/dispatch/news/thomson-reuters/130402/eurobank-nbg-shares-fall-recapitalisation-jitters