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Brussels will have the last word on Greek bank recapitalisation

12 November 2015 / 11:11:13  GRReporter
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The course of negotiations between the Greek government and creditor institutions, and especially the reaching of a decision by the Euroworking Group is the catalyst that will accelerate the completion of the offers of Greek banks to investors.

According to the sources of the online edition, their book-buildings will remain open until the beginning of next week as foreign investors are following the progress of negotiations with creditors and are waiting for a positive sign from Athens.

Meanwhile, the offers of Alpha Bank and Eurobank have been opened and the procedure to increase the share capital of the National Bank of Greece started today.

The sources who are close to the process indicate that the absence of uncertainty about the course of negotiations with creditors will further encourage private investors. As a result, it is believed that the four systemic banks will be able to attract more private capital.

The same sources say that with regard to the "hottest" issue in negotiations, namely the protection of the main homes of households from seizure and sale by auction, the Greek government and creditors are very close to an agreement. Achieving it will remove all obstacles to the smooth completion of bank recapitalisation.

In the event of a positive outcome of negotiations, it is expected that on Monday the Euroworking Group will approve the granting of the necessary total amount of 10 billion euro that is deposited in a special account to be used to support the Greek banks. If developments follow the order described, bank recapitalisation may be completed no later than the end of November. This scenario includes possible state funding for those banks that will need this type of support.

After the recapitalisation and based on the statements made by banks so far, they expect definitely greater private sector involvement in their share capital compared to the recent past.

In particular, if private shareholders meet the total capital requirements of Alpha Bank, which amount to 2.7 billion euro (1.6 billion euro through book-building and 1.1 billion euro from bank bonds), the participation rate of the Financial Stability Fund will fall to 20% from today's 62.2%.

Respectively, the percentage participation of the Financial Stability Fund in Eurobank will be limited to 6% compared to the 35% today.

If the baseline scenario is implemented, under which the requirements to be met amount to 2.2 billion euro (592 million euro of which from bank bonds), the participation of the Financial Stability Fund in the recapitalisation of Piraeus Bank will be limited to 25% from 66.9% at present.

As for the National Bank of Greece, if the required amount of 1.6 billion euro is covered, the participation of the Fund will fall from 52.7% to 40%.


Tags: EconomicsMarketsSystemic Greek banksRecapitalisationNegotiations with creditorsBook buildingPrivate investorsFinancial Stability Fund
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