National Bank of Greece ADR (fka NBGGY)

[mrfence]

Moody's: NBG's swap of its Greek government bonds is credit positive

Moody’s argues that National Bank’s bond swap of its Greek government bonds is credit positive. The exchange will increase the bank’s profitability in 2020 by approximately 515 million euros which equates to around 72% of the bank’s pre-provision income through third-quarter 2019.

“Although a one-off gain, the transaction supports the positive trajectory in the bank's capital adding approximately 135 basis points to its Common Equity Tier 1 ratio, which was at 16.8% as of 30 September 2019. In addition, NBG has secured a recurring source of interest income on a net basis of around 85 million euros per annum from the new GGBs until 2050,” says, adding “the higher capital base will facilitate the bank's efforts to reduce its large stock of NPEs, having a bigger capacity to book potential losses from the securitisations or sales of its NPEs.”

Moody’s argues that NBG's top priority is to improve its solvency by reducing NPEs. It also believes that Greece's gradually improving economic conditions combined with an enhanced capital position will help the bank front load a larger securitisation in 2020, potentially delivering an NPE balance of 1.6 billion euros sooner than principally planned in 2022.

http://www.marketall.eu/business/15677-moodys-nbgs-swap-of-its-greek-government-bonds-is-credit-positive