The merger of National Bank of Greece (NYSE:NBG), the bank Prem Watsa was said to be considering acquiring a stake in, and Eurobank Ergasias S.A. (ATH:EUROB) has been put on hold by European regulators. As a result, shares of National Bank of Greece (NYSE:NBG) fell, while shares of Eurobank Ergasias S.A. (ATH:EUROB)

National Bank of Greece

A press release issued by Eurobank Ergasias S.A. (ATH:EUROB) today announced the suspension of the merger. Initially shares of the banks plunged as much as 30 percent after that release was issued. Fox Business reports that they triggered limit down rules at the Athens Exchange today. At the moment of this writing, shares of National Bank of Greece (NYSE:NBG) were down 12.22 percent at the New York Stock Exchange.

Both banks now face the possibility of nationalization because it’s unlikely that they will be able to raise the amount of private capital they need in order to remain independent. National Bank of Greece (NYSE:NBG) purchased 84.3 percent of Eurobank through a share swap earlier this year and aimed to absorb the other bank entirely as both reel from the fallout of the debt crisis in Greece.

However, Reuters reports that the International Monetary Fund, European Central Bank and the European Commission were concerned that the large bank resulting from the merger would be too large in comparison to the nation’s economy.

Greek regulators say deposits in both banks will be safe even though the deal has been suspended. The banks need $20.3 billion in new capital in order to bring their solvency ratios to the central bank’s required levels.