The German online magazine Spiegel, raised suspicions that the government of Greece might end up going after bank accounts in case of emergency as the merger talks between the National Bank of Greece (NYSE:NBG) and Eurobank was suspended.

Greece Euro

Spiegel speculated that the situation in Cyprus wherein depositors in the country lose a percentage of their deposit could happen in Greece if its economy fails to recover soon with a great number of loan defaults. Domestic banks would need capital infusion.

The online magazine opened that the €50 billion earmarked to recapitalize Greece’s limping banking system from the €130 billion bailout it received from the European Union (EU) and International Monetary Fund (IMF) last year, may not suffice to a banking giant. In response to the concerns, Greek Finance Minister Yannis Stournaras expressed his assurance that bank deposits in Greece are safe.

In the case of Cyprus, the IMF agreed to provide €1.28 billion bailout over the next three years to stabilize the banking system and reduce public spending but the second largest bank in the country will be shutdown and the Bank of Cyprus will be restructured.

Large depositors will lose 37.5 percent of their deposits and losses are expected to increase as much as 60 percent after a final audit. The IMF indicated that the same policy will be implemented for any European bailout in the future. This is probably the reason behind the concerns of Spiegel on Greece banking system

The merger talks between the National Bank of Greece (NYSE:NBG) and Eurobank had been suspended because of their failure to reach the required capital. In addition, the international lenders supervising the Greece bailout are concerned the merger would create a giant bank that is too big to fail.

Many in Europe are increasingly concerned regarding risks from associated big banks in small countries like Europe. The proposed National Bank of Greece and Eurobank merger would create the biggest bank in Greece. Its combined assets will be approximately €180 billion or $234 billion, higher than the €190 billion GDP of Greece last year, which is expected to shrink by 4.5 percent this year.

According to the Central Bank of Greece, Eurobank and National Bank of Greece (NYSE:NBG) sent a letter stating their inability to assure that 10 percent of their share offerings would be acquired by the private sector, which is a part of the country’s agreement with its foreign creditors.

The Central Bank of Greece stated that deposits in all banks in Greece are guaranteed and the recapitalization of the four major banks in the country including Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank is expected to be completed by the end of April.

Meanwhile, BAML believed  Slovenia may also need a bailout and haircuts on deposits could possibly happen. The research firm cited that the country is suffering from economic headwinds. In 2013 Slovenia is -2 percent and its banking sector is weak with rapidly deteriorating credit quality.