Greece-based Piraeus Bank is negotiating with the National Bank of Greece (NBG) group over a potential merger into United Bulgarian Bank, owned by NBG, media reports suggest.

None of the two Greek lenders has yet commented on the reports of the Greek-language news website Euro2Day, which is quoted by the Bulgarian mass circulation daily 24 Chasa ("24 Hours").

If confirmed, this might make Bulgaria the first Southeastern European market where the structure of Greek banks will have been successfully overhauled as part of the anti-crisis measures.

This comes after Postbank, a subsidiary of Greece's Eurobank operating in Bulgaria, announced in mid-July it was taking over the Bulgarian branch network of Greek lender Alpha.

As of the moment (before Postbank and Alpha's deal has been finalized), 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.

If both deals are closed smoothly, only two Greek banks, Eurobank and NBG, will remain present on the Bulgarian market.

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.

According to Euro2Day's story, no similar mergers are expected for the moment in Romania, since the economy of Bulgaria's northern neighbor is still growing and Greek lenders there are facing a better outlook.

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