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In the third recapitalisation (which is it is very important be the last), the amount to be covered by private shareholders together with the contribution of the Liability Management Exercise (LME) programme is estimated at about 9 billion euro. With the involvement of the Financial Stability Fund, the total recapitalisation will amount to 13.7 billion euro, increasing the total bill to 50.6 billion euro within three years alone.

These developments have formed a totally new situation for the banking sector. The current participation of the Financial Stability Fund before the new capital increase is 57% in the National Bank of Greece, 66% in Alpha Bank, 67% in Piraeus Bank and about 35% in Eurobank.

What should also be noted is that the use of CoCos by one or more banks is hiding future risks for existing shareholders and for those who will participate in the capital increase. The high cost of servicing them on an annual basis should not be overlooked either.

The percentage participation of the Financial Stability Fund is estimated based on the assumption that banks will cover the total amount of their capital needs from individual persons and the burden sharing clauses will not be triggered. Otherwise, the preferred shares will be converted into ordinary ones, with a discount from their face value in the price of capital increase and the Fund will be involved with higher participation rates.

It should be noted that the reverse split offered for bank shares by banks’ managements are as follows: 100 old shares for 1 new one in Eurobank and Piraeus Bank, 50 old shares for 1 new one in Alpha Bank and 15 old shares for 1 new one in the National Bank Greece.

Simultaneously, it seems that the first issues are 0.4 times the tangible book value per share (P/TBV), which is a much lower value than the market forecasted a few weeks ago.

It should be noted that based on the current assessment, the Euro Stoxx Banks index expressed in P/TBV reached 0.9 times its tangible book value. With regard to Greek banks, this index varies from 0.03 for Piraeus Bank to 0.30 for the National Bank of Greece. Alpha Bank and Eurobank, which theoretically have "won" the stress tests, are in the middle, with this index varying at around 0.10.

The following estimates have been made in accordance with the data available as of 18 November and on the basis of bank announcements:

• In Alpha Bank, based on its current valuation and share price of 0.061 euro, the Financial Stability Fund is holding 66% of its shares and private shareholders the remaining ones. In the event that it covers all the 2.563 billion euro by increasing the share capital and LME, the P/ΤBV index will reach 0.37 times the value of shares after the recapitalisation or 3.3 billion euro, and 9.1 billion euro if adding the equity capital. The percentage participation of the Financial Stability Fund will be reduced to 15% and the so-called dilution of old shareholders will be in the range of 77%. At an issue price of 0.04 euro per share the Fund will hold 11% of the shares.

• In Piraeus Bank, based on its current valuation and share price of 0.034 euro, the Financial Stability Fund is holding 67% of shares. If the bank covers all the 2.213 billion euro by increasing the share capital and the LME, and 1.837 billion euro from CoCos, the P/ΤBV index after the recapitalisation will reach 0.27 times the value of shares or 3 billion euro, and 11.2 billion euro if adding the equity capital. The percentage participation of the Financial Stability Fund will be reduced to 22% and the so-called dilution of old shareholders will be in the range of 93%. If extracting the so-called CoCos from the bank’s equity capital, the P/TBV index will reach 0.32 times the value of shares.

• In the National Bank of Greece, the Financial Stability Fund is holding about 57% of shares. In the event that the bank covers all the 1.456 billion euro by increasing the share capital combined with 691 million euro from LME and 1.75 billion euro from CoCos, the P/ΤBV index after the recapitalisation will reach 0.45 times the value of shares or 4.1 billion euro, and 9 billion euro if adding the equity capital. The percentage participation of the Financial Stability Fund will be reduced to 33% and the so-called dilution of old shareholders will be in the range of 67%. If removing the so-called CoCos from the bank’s equity capital, the P/TBV index will reach 0.56 times the value of shares.

• Finally, in Eurobank, the Financial Stability Fund is holding 35% of the shares. If the bank covers all the 2.04 billion euro by increasing the share capital, the P/ΤBV index after the recapitalisation will reach 0.42 times the value of shares or 2.4 billion euro, and 5.6 billion euro if adding the equity capital. The so-called dilution of old shareholders would be of the order of 87%. The percentage participation of the Financial Stability Fund will be reduced to 2.4%.