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Greek banks seek 6 billion euro from private investors

19 October 2015 / 18:10:23  GRReporter
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Greek banks will access international markets in a dynamic manner, not directly relying on the additional capital from the sale of subsidiary financial institutions included in the restructuring plans. This will happen through a new round of meetings with foreign investors, which will start from the middle of this week. According to the sources of, banks will seek from international markets capital amounting to about 5.5-6 billion euro.

While the amount of capital requirements was virtually frozen after the meetings of bankers with the representatives of the Single Supervisory Mechanism (SSM) in Frankfurt and the situation began to gradually clear up, albeit in conditions of total secrecy, banks are anticipating the law on the financial stability fund as well as the recapitalisation framework to start the decisive round of negotiations with the international investor community. This round of meetings will specify foreign investor interest that will acquire its final form immediately after 30 October. Subsequently the final meetings will be carried out following the announcement of the stress test results and the formal notification for the recapitalisation amount, and the tenders for banks will be opened.

Foreign investors have requested guarantees that they will not be "trapped" in unsuccessful recapitalisation. In particular, they have asked, and expect, to be given the opportunity to withdraw if no sufficient private capital is put into banks and ultimately the percentage participation of the state increases. Their request is associated with the obvious difficulties faced by Greek banks in their attempts to obtain solid capital from international markets, both simultaneously and in a short period.

In turn, banks will not try to cover their capital requirements under the adverse scenario, as they believe that the rigorous forecasts of the European Central Bank will eventually become much more moderate. It is evident that the capital requirements that will become clear after the stress tests will differ for individual banks and some of them will require more capital and others less.

On the other hand, the opportunities will not be underestimated to raise funds from international investors in return for proceeds that seem to be guaranteed by the sale of assets, the most significant example of this being the sale of Finansbank by the National Bank of Greece.

According to sources, the National Bank management considers it unreasonable to rely only on funds from the sale of Finansbank to cover its capital requirements for 2015. And this because if the sale fails for some reason, the National Bank of Greece may be forced to seek additional capital from international markets in 2016, under the full implementation of the EU Bank Recovery and Resolution Directive. Therefore, to avoid such developments, which would put at risk its shareholders, bondholders and depositors, the National Bank will work very actively to find investment capital during the so-called road shows that will take place in the near future.

Tags: Greek banksRecapitalisationCapital requirementsStress tests
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