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The National Bank of Greece increased its capital by 2.5 billion euro

06 May 2014 / 11:05:13  GRReporter
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Tenders in the recapitalization of the National Bank of Greece have started today, but experts say that investors’ interest is serious and the institution will cover its needs twofold.

The procedure is expected to finish on 8 May, and the issue price of shares will be announced the following day. According to sources of the management of the bank, investors from the USA and Europe, as well as from Greece, including some of the biggest players on the world market investments, want to participate in the recapitalization.

It is estimated that bids will cover between 1.5 and 2 times the bank’s capital needs. Investors’ interest was evident from the successful issue of bonds by the National Bank of Greece and Finansbank, as well as from contacts of Deputy CEO Petros Christodoulou in New York and Boston last week, and also in London and Paris over the past two days.

The bank’s invitation to investors is based primarily on the dynamics of internal activities related to the ability of generating revenues via funding of attractive sectors of the economy and the recovery of incomes from fees, as well as via the revaluation of term deposits.

Besides foreign funds, existing shareholders of the Bank, such as The Latsis Consortium, as well as other prominent businessmen and ship owners who participated in the previous recapitalization will also take part.

Within a few days, the management team met more than 120 representatives of institutional portfolios. Credit rating agencies Goldman Sachs and Morgan Stanley are joint international coordinators and managers in terms of the assessment of tenders. The capital increase of the Bank of Greece will take place via a private placement and the whole issue will be allocated to investors abroad.

The recapitalization of the National Bank of Greece is expected to upturn investor flow to the Greek banking sector with a "parade", which will involve all the major investors who have stayed away from the Greek market for years, including pension funds from Europe and Asia.

According to analysts, after the finalization of the procedure, the private participation in the share capital of the bank will increase significantly (up to 42%). Accordingly, the participation of the State Fiscal Stabilization Fund (SFSF) will decrease from 84.39% to 58%. In particular, from the current 84.39%, it is expected to fall to 58% and the participation of private investors will increase to 42%.

After the finalization of the capital increase procedure and other actions of the management of the bank (asset sales, cost reductions, etc.), the National Bank of Greece will become one of the best capitalized banks in Europe. Besides the 2.5 billion euro increase, the institution will receive an additional 1.04 billion euro from the Action Programme that it submitted to the Bank of Greece and which had already been approved.

Tags: Economy Markets National Bank of Greece capital increase offers investors
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