Galery

1

On the first day of this week, the shares of the banks on the Athens Stock Exchange rose by 20%, causing euphoria in the financial market. The main stock exchange index closed with an increase of 3% compared to Friday's session and reached 1,065 basis points. The shares of Alpha Bank increased by 28.3%, of Piraeus – by 28.5% and Eurobank's – by slightly over 28%. The National Bank of Greece closed on Monday at 12.5% and the profits of Attica bank reached 12.6%. In total, the financial services sector closed with an increase of +6.5%, the sectors of primary raw materials with +5.2% and of household appliances with +4.5%.

Takis Zamanis, analyst at Beta company, told Reuters that in his opinion the increase in the shares of Alpha Bank had stimulated the other banks, allowing them to record profits. Other more sceptical voices believe that the boom in the Athens Stock Exchange has been artificially stimulated in order for the recapitalization of the Greek banks, which is currently underway, to be completed with greater success.

More sceptical voices believe that the boom in the Athens Stock Exchange has been artificially stimulated in order for the recapitalization of the Greek banks to be completed with greater success.Meanwhile, analysts point out that by the end of June, Postbank (TT) should be merged with one of the four largest commercial banks in the country as stipulated in the plan of the restructuring of the financial system. It will be divided into a "good" and a "bad" part following the example of the Cypriot Laiki Bank. Postbank is the last public bank in the country which has to become privately owned.

It became clear over the weekend that the National Bank of Greece has taken over First Business Bank (FBB). On Monday, 19 branches of the smaller financial institution started operating under the umbrella of the NBG. The transactions and customer service continue normally as stated by FBB. According to the public announcement, FBB was unable to raise the funds required for the recapitalization and it has transferred its healthy assets (deposits and performing loans) to the larger bank. The bank's liabilities total 123 million euro and its assets amount to 152 million euro. Consultant for the merger process was Credit Suisse Securities (Europe) Limited, as reported by Imerisia.

Probank too is experiencing some difficulties in its attempt to increase its capital by 282 million euro as stipulated by the Bank of Greece. The Ministry of Finance assures that the deposits in this and in other commercial banks are fully guaranteed and that the recapitalization procedures should be completed by the end of the month.

The Bank of Greece has appointed a special supervisor to monitor that all necessary steps, to complete the capital increase in time, be taken during the recovery process of the financial institution. Probank has received one month’s reprieve to raise the funds required, which has resulted in the appointment of a supervisor. The institution is trying to attract investment not only from legal entities, but also from new individual shareholders. To Vima reports that the employees of Probank have already taken part in the capital increase and have raised 30 million euro to recover the bank.

The urgent need for capital in the Greek banking system has proved attractive for hedge funds. According to the Financial Times, Farallon Capital, York Capital Management, QVT Financial and Dromeus are some of the funds, which are believed to have poured money into the local financial system. Analysts claim that they have a hand in the increase of the share capital of Alpha Bank although there has been no official confirmation from the relevant institutions.

Dromeus’ head Achileas Risvas believes that the major role in attracting hedge funds to Alpha was played by the warrants that are given to the investors involved in the capital increase. With the purchase of one new share, the investor receives a warrant, which incorporates ten shares of the new recapitalized bank and significantly increases the return on investment. Risvas defines the involvement of private investors in the recapitalization process as a "gift-profit with limited risk" as reported by moneyonline.gr. He insists that if the new shares increase by 50%, the value of the warrants will increase by 400%.