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Alpha bank’s recapitalisation is going well

25 April 2013 / 16:04:56  GRReporter
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Local and foreign investors have confidence in Alpha bank and it is approaching faster its goals for a recapitalisation from the free market. It seems that the financial institution will be able not only to cover its required 10% of private investment in the process of capital increase, but it may also reach 12%.

According to publicly announced information, Alpha bank needs 4.57 billion euro capital increase in order to meet the requirements of the supervision. In order to keep its private character, the bank needs to raise 10% of this amount on its own through share capital increase and attraction of private investors. The rest of the capital will be given by the Hellenic Financial Stability Fund. It manages funds for banks granted by the European Financial Stabilisation Mechanism and leads the healing process of the Greek financial system.

The bank has already collected a significant amount from private Greek entrepreneurs and industrialists who want  to become shareholders in the new scheme. Participations of new investors range from between five and ten million euro. It is predicted that, after the recapitalisation, Alpha bank will raise 550 million euro from private capital and it will cover the capital increase from the open market not by 10%, but by 12%.

Meanwhile, the bank's management is continuing their contacts with small shareholders. They exceed 

130,000 nationwide and Alpha bank is encouraging them to support the process of recapitalisation. In a series of presentations, Executive Director of the Bank Dimitris Mantsounis informed minority shareholders about the opportunities offered by warrants to investors. They allow new shareholders to receive a total of ten shares upon participation in the share capital increase. With the purchase of one new share, the investor receives a warrant, which incorporates ten shares of the new recapitalised bank.

Currently, the management of the institution is carrying out a campaign in order to explain the benefits offered by small shareholders’ participation in the capital increase. Warrants will be traded on the Athens Stock Exchange. Thus, investors will be able to gain profits from their ordinary sale or wait in order to receive a larger share in the bank at a later stage.

If everything goes smoothly, the capital adequacy ratio of the financial institution will reach 13.7% after the recapitalisation process. The bank will have sufficient capital reserves in order to cover future risks. On the other hand, synergies that may arise from the merger of Alpha bank and Emporiki are calculated at 250 million euro. They will enable the bank’s shares to increase in the near future according to Greek financial analysts' predictions.

At the end of 2012, Alpha bank’s reserve was 4.6 billion euro and the coverage of deposits was 52%, taking into account the financial portfolio of Emporiki. In order to raise 550 million euro from private investors, the bank launched an auction of preferred shares worth 457 million euro, as well as 93 million euro for additional private funding.

"Critical decisions will be made by the end of April. After the recapitalisation, banks will become strong and dynamic in order to be able to support the economy and play their primary role - financing of the real business," was adamant President of the Bank of Greece George Provopoulos who visited President of the Republic, Carlos Papoulias.

This opinion is not shared by the majority of small and medium entrepreneurs in the country who have not been able to get a loan for the development of their business for more than two years. Low liquidity and lack of access to the private capital market has significantly limited the lending abilities of local financial institutions. Merchants and entrepreneurs are not expecting things to change dramatically after the recapitalisation. The process itself is aimed at filling holes in banks’ budgets that opened after write-downs of sovereign debt (PSI) instead of finding cheaper financing for granting loans with affordable interest rates.

Tags: Economy Companies Alpha bank recapitalisation Greece financial aid
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