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Eurobank and Grivalia Join Forces and Announce Merger

The new group is targeting an NPE ratio of c. 15% by end 2019 and single digit by 2021

• Creates Strongest Greek Bank Poised for Broader Economic Growth: The merger creates the best capitalized bank in Greece, with total capital ratio at 19%, ready to serve its clients, return to growth and support economic activity in Greece and Southeastern Europe.
• De-risking the Balance Sheet: Eurobank plans to substantially accelerate NPE reduction to a ratio of approximately 15% by the end of 2019 and single digit by 2021 with an NPE deconsolidation of approximately €7 billion in a single transaction with all shareholders keeping potential upside from the NPEs (“Acceleration Plan”).
• Highly Accretive Combination: The merger is capital and earnings accretive; fully loaded CET1 increases to 13.8% and pre-provision income to €0.28 per share. The combined group is targeting strong sustainable earnings per share and over 10% return on tangible equity in 2020.
• Combination Unlocks Further Value: Applying the best-in-class real estate management skills of the Grivalia team led by Mr. George Chryssikos will unlock the value of the existing and future real estate assets of the combined group. Mr. Chryssikos will be proposed for nonexecutive Vice Chairman of the Board of Directors of Eurobank and will join the Strategic
Planning Committee.
• Unanimous Approval: The merger is unanimously supported and recommended by both Boards of Directors. The Boards of Directors (“BoD”) of Eurobank Ergasias S.A. (“Eurobank” or “Bank”) and Grivalia Properties REIC (“Grivalia”) announce that they unanimously decided to commence the merger of the two companies by absorption of Grivalia by Eurobank according to the relevant provisions of the corporate law, l. 2515/1997 and l. 2166/1993 as in force (the “Merger”).

A. Key terms of the Merger
The exchange ratio proposed is c. 15.81 new Eurobank ordinary shares for every 1 Grivalia ordinary share, while Eurobank shareholders will retain the number of Eurobank ordinary shares they currently hold (the “Exchange Ratio”). Prior to completion of the Merger, Grivalia will proceed with (i) a distribution of approx. €40.5m (€0.42 per Grivalia share2) to its shareholders via a share capital reduction (the “Pre-Transaction Distribution”) and (ii) a distribution of €13.7m to its employees and BoD members, representing accrued bonus payments and BoD fees for 2018, deferred bonuses from previous years as well as partial vesting of the long term incentive plan.
The Merger will result in a pro forma ownership split of the enlarged share capital of c. 59% owned by existing Eurobank shareholders and c. 41% by existing Grivalia shareholders3.

The Exchange Ratio plus the Pre-Transaction Distribution represent a premium of 9% over the share price of Grivalia, based on the closing prices as of Friday, 23 November 2018.

The Exchange Ratio is subject to (i) the Boards of Eurobank and Grivalia and (ii) Hellenic Financial Stability Fund (“HFSF”), all three entities, receiving fairness opinions from international investment banks.

The completion of the Merger is subject to (i) no event, fact, occurrence or change having (or reasonably expected to have) a material adverse effect on the business, financial condition or liabilities of either Eurobank or Grivalia (which would include any potentially significant unfavorable financial, legal or administrative outcomes) and (ii) obtaining all necessary approvals
from the General Meetings (“GM”) of the two companies, the HFSF and relevant regulatory authorities.

The date of the Merger balance sheet will be 31 December 2018.
Fairfax Financial Holdings Limited (“FFH”), which currently holds 18.23% and 51.43% 4 in Eurobank and Grivalia, respectively, will become the largest shareholder in the merged entity with a 32.93% shareholding. Subject to the relevant legal and regulatory requirements and Eurobank’s corporate governance procedures, upon the completion of the Merger, Mr. George Chryssikos, currently non-executive director of Eurobank, will be proposed for non-executive Vice Chairman of the BoD of Eurobank and will join the Strategic Planning Committee. Mr. Nikolaos Bertsos, currently Chairman of the
BoD of Grivalia, will be proposed for a non-executive member of the BoD of Eurobank.