Two of Greece's biggest banks risk being nationalized after admitting they were unlikely to raise enough cash from private investors and seeing their merger blocked by the country's international lenders

As Reuters informs, National Bank bought 84.3 percent of smaller rival Euro bank via a share swap in February, as Greek banks consolidated to survive a debt crisis that has pushed the country's economy into a six-year slump.

But lenders fear the combined entity, with assets of about 170 billion euros, will be too big relative to Greece's 190 billion euro economy and make it difficult to sell in the future, prompting the state to halt their integration until a state bank support fund decides their future.

Both banks told the central bank they are unlikely to raise a set portion of their planned share issues from the market, meaning they would fall under the control of the support fund, the Hellenic Financial Stability Fund (HFSF).

Both banks need 15.6 billion euros to boost their solvency ratios to levels set by the central bank after losses from a sovereign debt writedown.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on April 15, 2013