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Alpha Bank Eyes Capital Increase After Bad Loans Peak -- Update 


By Nektaria Stamouli and Alkman Granitsas ATHENS--Greece's Alpha Bank AS said Monday it thinks it has seen the peak in its mountain of bad loans, something it hopes will help pique investors' interest in an upcoming EUR1.2 billion ($1.67 billion) share-capital increase. In the last three months of 2013, the bank set aside EUR449 million for loans that had gone sour--EUR41 million less than in the previous quarter and down from EUR479 million in the second.

The bank's efforts to manage its bad loans "have provided tangible results as our nonperforming loans [have decreased], allowing us to anticipate further reduction in the cost of risk in 2014," Chief Executive Demetrios Mantzounis said in a statement.

After a deep, six-year recession, the collapse of a property bubble, withdrawals by depositors and a EUR200 billion sovereign-debt restructuring, Greece's banks are struggling. Last year, they were recapitalized with the help of a European Union loan, but together they still hold some EUR70 billion in bad loans--a sum equal to a third of Greece's annual gross domestic product.

With bad loans soaring, the Bank of Greece had commissioned outside consultant BlackRock Solutions to assess banks' loan portfolios, something the firm also did in 2011.

Last week the country's central bank said Greek banks would need another EUR6.4 billion to shore up their still-fragile balance sheets.

The central bank's report, based on the BlackRock stress test, came out almost two years after Greece first received the EU loan--of EUR50 billion--to recapitalize the Greek banking system. To date, Greece has used up most of that loan. Roughly EUR8 billion is still held in reserve. According to Bank of Greece, Alpha Bank faces a EUR262 million shortfall.

To deal with that, as well as pay off past preference shares held by the Greek government, Alpha Bank has called a shareholders' meeting for March 28 to approve an up to EUR1.2 billion capital increase. Greece's other two systemically important banks-- Piraeus Bank SA and Eurobank Ergasias SA--have also announced capital increases, while National Bank of Greece SA said it would manage through asset sales and streamlining internal operations.

In the fourth quarter of 2013, Alpha Bank posted another net loss for the fourth quarter of EUR210 million, a narrow improvement from a EUR228.7 million net loss in the third quarter. The figures aren't directly comparable with the year-earlier period, due to a series of acquisitions the bank has undertaken.

The bank reported net interest income of EUR476.1 million from October to December--up from EUR447.4 million the quarter before--reflecting improved funding costs for the lender.

Write to Nektaria Stamouli at [e-mail] and Alkman Granitsas at [e-mail] Access Investor Kit for Bank of Greece SA Visit http://www.companyspotlight.com/partner?cp_code=A591?=GRS004013009 Access Investor Kit for Alpha Bank SA Visit http://www.companyspotlight.com/partner?cp_code=A591?=GRS015013006 Access Investor Kit for Alpha Bank SA Visit http://www.companyspotlight.com/partner?cp_code=A591?=US02071M1018 Subscribe to WSJ: http://online.wsj.com?mod=djnwires (END) Dow Jones Newswires March 10, 2014 13:15 ET (17:15 GMT) Copyright (c) 2014 Dow Jones & Company, Inc. 031014 17:15 -- GMT Story ID: MAR102014_DJB_02Ce Keywords: CORPORATE ACTIONS, ALL COMPANY NEWS, EARNINGS Symbols: ALBKY, ALPHA.AT, EGFEY, ETE.AT, EUROB.AT, NBG, TELL.AT, TPEIR.AT