Alpha Bank on Thursday detailed the reasons it declined a friendly merger offer by rival National Bank, pointing mostly at concerns over a "nationalisation" of the former rather than an equal merger of the two domestic banking giants.

“A merger between Alpha Bank and a bank like National Bank - whose management is appointed by the government -- could lead to the nationalisation of one of the strongest banks of the private sector and to the loss of an invaluable comparative advantage as well as the loss sustainable stability of a management enjoying the confidence of shareholders, customers and its staff,” Alpha Bank said in its weekly economic bulletin on Thursday.

The comments permanently end any scenarios emerging locally, following a same-day rejection of National Bank’s merger proposal by Alpha Bank last Friday.

“Continuing state control of banks through pension funds is making it difficult to promote business transformations, while pension funds are also obliged to maintain a portfolio of shares in state-controlled banks, regardless of their share performance or their outlook,” the bulletin stressed.

Alpha Bank noted that the government could promote regulation to ensure the independence of pension fund management and other organisations' reserves, so that they do not act as a mechanism of control of large banks by the state.

“This is the only way to have a necessary restructuring of the Greek banking system,” the bulletin said. The bank acknowledged that efforts at restructuring and rationalising the operations of financial institutions in the country - particularly state-run banks - have been delayed despite the fact that a Financial Stability Fund -managing 10 billion euros- has begun operations. The bulletin added that a merger between

Alpha Bank and National Bank would not cover the hard work needed to be done towards restructuring state banks.

“There no short-cuts, or magic solutions to reach a recovery of the Greek economy. In any case, though, the banking system responds to the economy’s funding needs in the best way possible, given the adverse conditions prevailing in liquidity because of the fiscal crisis. In this difficult environment, Greek banks are cutting expenses, reducing credit risks and balancing their lending/saving ratio.

Cutting the fiscal deficit is a one-way street to ensure a return of the Greek state and Greek banks to international markets,” the bulletin added.