UPDATE: The Athens Stock Exchange is up nearly 15% after the announcement. Word is that the merger could make the new bank too big too fail. See the ASE skyrocket below.
Two major Greek banks will consolidate in order to tackle funding and debt challenges, according to a Reuters report.
Eurobank Ergasias and Alpha Bank will announce the merger in the next few hours, in order to avoid tapping into emergency liquidity assistancethe Bank of Greece made available last week.
The two banks will also receive an injection of capital from the Qatar Investment Authority.
Bank consolidation is likely to continue as Greek banks struggle to stay afloat without access to interbank funding.
Eurobank Ergasias failed the big ECB stress tests that came out in July, after failing to meet the necessary capital requirement. Greek banks are widely regarded to be in worse shape than any other banks in the eurozone, since they have been depending on ECB funds to remain solvent.