Greek lender Eurobank has agreed to merge its Serbian arm Eurobank Beograd with local player Direktna Banka.

The officials of Eurobank has concluded an agreement with the shareholders and principals of Direktna Banka to execute the merger.

As agreed, Eurobank will hold 70% stake in the combined bank. The shareholders of Direktna Banka will own the remaining stake.

The transaction is expected to close during the last quarter of 2021, subject to regulatory approvals.

Once complete, the combined bank will operate as Eurobank Direktna. It will have more than €2bn in total assets and total equity above €300m. The combined lender will also hold a market share of more than 6.5% in total loans making it the seventh largest in Serbia.

Eurobank Group COO and International Activities head Stavros Ioannou said: “We are pleased to have reached an agreement with the principals of Direktna for the merger of our two banks in Serbia and the creation of a much stronger, larger and dynamic local financial institution.

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“This Transaction is in line with Eurobank’s strategy to further expand its international activities and create additional value for its shareholders via targeted acquisitions, mergers or joint ventures.”

Direktna principals Andrej Jovanović and Bojan Milovanović said: “This merger represents a clear opportunity for enhancing profitable growth that we have experienced with Direktna.

“We believe that Eurobank Direktna will have a unique opportunity to benefit from strong institutional background and size brought by our partners from Eurobank and from our deep understanding of our home market.

“The combination of our people and expertise will make Eurobank Direktna a bank of choice in the Serbian market.”

The deal will be capital neutral for Eurobank.