National Bank of Greece : Greek banks under pressure to plug 14.4B capital shortfall
11/03/2015 |
Greece's four main lenders face a Friday, Nov. 6, deadline for outlining how they plan to raise 14.4 billion ($15.9 billion) in capital by year's end following the latest health check from the European Central Bank.
The asset-quality review, carried out by the euro zone's new single banking supervisor, identified the capital shortfall at National Bank of Greece SA, Piraeus Bank SA, Eurobank Ergesias SA and Alpha Bank AE.
"Covering the shortfalls by raising capital will result in the creation of prudential buffers at the four Greek banks, which will improve the resilience of their balance sheets and their capacity to withstand potential adverse macroeconomic shocks," the Frankfurt-based ECB said over the weekend.
Under the stress-test scenario, Piraeus Bank faces the biggest hole, of around 4.9 billion, followed by National Bank of Greece (4.6 billion), Eurobank (2.1 billion) and Alpha Bank (2.7 billion). The regulator identified a smaller, 4.4 billion, shortfall under "base case" modeling.
The overall shortfall is largely in line with expectations and comes after euro-zone finance chiefs in July set aside 25 billion for Greek lenders as part of an 86 billion bailout package designed to keep the Mediterranean country from going under.
New legislation approved by Greek lawmakers on Saturday gives the state-owned Hellenic Financial Stability Fund a more active role in helping lenders get back on their feet, with new powers to evaluate bank boards and veto strategic decisions. The bill also says the fund can cover part of the capital gap to banks either through capital convertible securities, or shares with full voting rights, with details to be worked out by the Greek cabinet.
In the meantime, the lenders are gearing up to raise money from private sources after reporting combined net losses of more than 4.6 billion in quarterly results filed on Saturday.
"National Bank of Greece intends to cover both the base case and adverse scenario shortfalls with as much capital as possible from private sources and its own capital actions, so as to significantly minimize the need for state aid and consequent burden on Greek debt," said CEO Leonidas Fragkiadakis in a statement.
Piraeus Bank CEO Anthimos Thomopoulos said his bank also plans to raise capital from private investors and other secondary actions. He added that based on recent investor feedback, "we are confident that our plan can be successfully executed in a short time."
Alpha Bank didn't refer to its capital-raising plans plans, in a statement expressing confidence in its "resilience," while Eurobank promised an announcement once its recapitalization plan gets the green light. It said that in the meantime it has appointed Bank of America Merrill Lynch, HSBC Holdings plc and Mediobanca SpA to assist in connection with the plan "and the potential recapitalization" that may result.
