Attica Bank, Greece’s fifth largest lender, announced on Monday an initial agreement to merge with the smaller Pancretan Bank in an effort to clean up its balance sheet and create a new banking organisation.

The new entity will conduct later this year a capital boost that will be used to cover its capital needs and reduce its non-performing loan exposure.

“The two shareholders confirmed that an agreement in principle on a commonly accepted basis had been reached,” the bank said in a statement, without providing more details

The Greek banks bailout fund, the Hellenic Financial Stability Fund, owns 72.5% of Attica, with Pancretan holding 5%, Thrivest Holding 4.4% and pension funds about 10%.

Original Story: Reuters
Edition: Prime Yield