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Why foreign investors have turned to Greek banks

27 April 2014 / 13:04:29  GRReporter
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Piraeus Bank and Alpha Bank were the two banks which were absolutely prepared for recapitalization, and acquired capital providing them a stable capital "cushion", besides the fact that they covered all their capital needs, estimated by stress tests.

The case of Eurobank is interesting, since the Financial Stability Fund remains with a minority portion in the bank. Investors are showing keen interest in the Greek banking sector and the reason for this is the expected return from the particular investment. They believe that banks will be profitable after the end of the recession, since they have been restructured, as well as due to the fact that the cycle of "red" loans will finish. In addition, the development will allow the banks to indulge in traditional activities, which in turn will boost the economy.


The first bank in which the Financial Stability Fund is a minority owner

The capital increase began yesterday, with a sale price from 0.30 - 0.33 euro and the issuance of 9,546,666,667 new common shares of the combined offer of Eurobank in Greece and abroad. Offers concern both foreign investors during the book building process and Greek individuals and institutional investors. The combined offer expires on 29 April. The exact sale price will affect the price which will eventually be given by the group of investors of Fairfax. Road shows of the bank abroad are currently being developed and the atmosphere is positive. According to current data, expressions of interest have surpassed 2.5 billion euro, exceeding the amount of 1.53 billion euro, which is the purpose of the bank, while the remaining 1.332 billion euro will be submitted by Fairfax.

As for domestic investors, they will be registered at a price of 0.33 euro and will expect the clearing of bids after fixing the sale price. It is believed that the final price will be closer to the upper limit. If 2.864 billion euro is collected from individuals, the Core Tier I capital will be 19%. At the same time, the Common Equity Tier I and the total capital adequacy ratio will be formed according to data from 31 December 2013 at 10.6%. The final price increase and allocation of shares will be announced on 30 April 2014. Capital from individuals will be submitted on 5 May and the approval will be on 7 May. The negotiation of shares will start on 9 May.

The National Bank

A road show for capital increase

The National Bank is seeking capital of medium-term character in order to increase its capital by 2.5 billion euro. Road shows are in development and expected to be completed by the end of next week. Investors, which the bank is targeting, include large companies such as Fidelity, BNY Mellon, Pimco and Black Rock. In its presentations, the bank presents the credit portfolio of the Greek market, which is healthy and has good prospects. The degree of implementation of the increase, however, as in other cases, will depend largely on the share price. It will be announced on 9 May after the general meeting of the bank and will be formed via book building.

Some representatives of the market explained that the significant demand for bond issue of the bank amounting to 750 million euro is an indication of the way in which investors will move. Yesterday, the group’s bond issue ended at 4.5%, below the 4.95% interest rate on the basis of which a five-year bond issue of the Greek state was assessed. Meanwhile, Finansbank received another 500 million euro yesterday via five-year Eurobond. According to Reuter’s sources, the final interest rate is 6.375%.

With the capital received both from the market and the restructuring, the National Bank fully covers the capital needs from stress tests and has the financial means to continue with the acquisition and cancellation of preference shares of the Greek state. Moreover, it will manage to maintain a significant capital "cushion" which will allow it to fund its business plans intended for funding the real economy.

Tags: recapitalization investors banking system National Bank Eurobank
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