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Piraeus Bank’s “dowry” is increasing

20 April 2013 / 14:04:48  GRReporter
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The Portuguese group BCP will contribute 400 million euro in the capital increase of Piraeus Bank. The approval of the transfer agreement for Millennium Bank by the Financial Stability Fund revealed a surprise – the bank’s “dowry” in terms of recapitalisation is increasing compared to the initial estimates of 270 million euro.

The contribution of BCP and Societe Generale will bring the bank 570 million euro, and the bank is looking for a way to boost private participation by more than 10% through contacts with investment portfolios of its shareholders or other investors.

Announcements for the acquisition of Millennium Bank are expected on Monday or Tuesday when there will be a general meeting of the bank, which will approve the plan for capital strengthening, but reliable sources said that the Portuguese will contribute 400 million euro.

From Geniki Bank

The acquisition of Geniki Bank brought Piraeus Bank 170 million euro and it will start the process from a positive base. As a result, estimates are increasing and there are talks about more than 10% coverage. The total capital needs of the group amount to 7.33 billion euro and 10% of them amount to 733 million euro. If convertible bonds (Coco's) are issued - something that the bank’s management is trying to avoid, if possible - the amount may be reduced, reaching 533 million euro.

At the weekend and next week representatives of the bank will present the plan to foreign investors. Based on the capital strengthening plan that shareholders will approve on Tuesday the bank will cover 400 million euro with private participation and partial cancellation of the right of preference. According to information, some shareholders, such as Greek businessmen and the Czech Fund PPF, will participate in the capital increase.

The acquisition of Cypriot branches in Greece reinforced the power of the bank, and, although there is no effect on the 10% private participation in the recapitalisation, there is business logic, since it has increased the size, liquidity, high coverage, according to predictions, and opportunity for synergies on a large scale. This dynamic of the group, following purchases it has carried out since the summer, will be presented by the management to the investment community. According to data, in the first nine months of 2012, Millennium Bank, which is included in the group, had assets amounting to 5.14 billion euro, 2.8 billion euro deposits, and loans to the amount of 4.47 billion euro. In the first nine months, it suffered losses amounting to 104.4 million euro, while estimated losses amounted to 117.75 million euro. During the last year it has been carrying out a process of restructuring, in which its network has been reduced from 153 to 120 branches, as well as the number of employees - from 1431 to 1192. As a result, the cost has been reduced by 14%.

Two other increases

Two other capital increases will be submitted for approval at the meeting of Piraeus Bank on 23 April - by 570 million euro and 524 million euro for the capital needs of the Agricultural Bank ATE and Cypriot banks respectively, which will be covered by the Financial Stability Fund. The capital strengthening plan includes a capital increase by issuing new shares to the amount of 7.335 billion euro for the coverage of capital needs, as defined by the Bank of Greece.

Meanwhile, Piraeus Bank has signed a contract with Dorinel Umbrarescu, head of the business group operating in the construction field in Romania, for the sale of 93.27% of ATE Bank Romania’s share capital to the amount of 10.3 million euro. The transfer will take place after the separation of the majority of ATE Bank Romania’s assets and liabilities, as well as their transfer to Piraeus Bank Romania. The contract must be approved by the competent authorities.

The meeting in the Ministry of Finance ended with no official statements. Its main topic was the recapitalisation of four good banks, which should be carried out by 30 April. The meeting was attended by Finance Minister Yiannis Stournaras, Governor of the Bank of Greece George Provopoulos, Executive Director of the Financial Stability Fund Anastasia Sakellariou, and Chairman of the Union of Greek Banks George Zanias.

Tags: Piraeus Bank Millenium Bank recapitalisation capital increase
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