Bulgaria’s Postbank, a subsidiary of Greece’s Eurobank, has announced the acquisition of the Bulgarian branch network of Alpha Bank, another Greek lender.

With the acquisition, "Postbank will strengthen its market position in the Bulgarian banking sector and expand its customer base in both the retail and corporate business banking segments,” the bank said in a statement on Friday.

The price of the deal was not disclosed but according to banking sources quoted by Reuters it is EUR 1.

Postbank said the deal, which is expected to be completed by the end of the year pending regulatory approval, is fully aligned with Alpha Bank’s restructuring plan, as approved by the European Commission last year, and its commitment to focus its operations only on its core markets.

The transaction “also serves ideally Postbank’s strategy to expand its operations and further enhance its presence in the Bulgarian market”.

The memorandum of understanding that was signed on Friday,  covers the entire banking operations of Alpha Bank Bulgaria, which comprise EUR 254 M in deposits and  gross loans worth EUR 410 M.

Following the completion of the deal, Postbank will become the fourth largest bank in Bulgaria by deposits and loans with a network of more than 200 locations in the country, it said.

The acquisition will allow Alpha Bank to shore up liquidity in Greece and may also help insulate Bulgaria from the Greek debt crisis, Reuters said in its coverage of the news.

Four Greek banks, including Eurobank and Alpha Bank, control around a fifth of Bulgaria’s banking assets which has raised concerns of contagion from the Greek crisis. Unlike Alpha Bank Bulgaria, which is a branch of Greece’s Alpha Bank and operates under the supervision of Greek banking authorities, the other three Greek lenders run subsidiaries, which are supervised by Bulgaria’s central bank.

The deal is expected to contribute positively to Postbank’s pre-provision income from the second year of combined operations and significantly improve its coverage ratios, Postbank said.

Greek banks have been under pressure from the European Commission to focus on the domestic market and limit their foreign exposure within the next two years, according to Greek newspaper Kathimerini. However, Greek banks hope to maintain their businesses in countries where they have a strong presence, Greek Reporter has said.

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