Agricultural Bank of Greece SA, the nation’s only bank to fail the European Union’s stress tests, plans a 1 billion-euro ($1.3 billion) capital increase.
“ATEbank will proceed, in concert with its main shareholder, the Greek State, with a share capital increase to boost and simultaneously improve the quality of its capital base,” Chairman Theodoros Pantalakis said in an e-mailed statement today. The sale will be accompanied by a “comprehensive” restructuring plan, the bank said.
The lender, 77 percent owned by the state, said today its nine-month net loss was 117.2 million euros, compared with a year-earlier profit of 82.4 million euros, as it increased charges for loan losses and had a trading loss. Deposits declined 9.4 percent from a year earlier, reflecting economic uncertainty and the impact of Greek government austerity measures on disposable income, the bank said.
The lender’s Tier 1 capital ratio, a measure of financial strength, stood at 7.12 percent. The proceeds from the stock offering will be used to boost capital, as well as repay 675 million euros of preferred shares held by the state.
Stress Test
ATEbank reported a shortfall of 242.6 million euros in European-wide stress tests in July with the lender’s Tier 1 ratio dropping to 4.36 percent under the most stringent scenario, less than the 6 percent threshold. The Athens-based institution is one of seven EU banks that failed the tests. EU regulators scrutinized 91 of the bloc’s banks to assess whether they have enough capital to withstand a recession and sovereign- debt crisis.
ATEbank is the latest Greek bank to announce plans to replenish capital after the country almost defaulted on its debt earlier this year. The Basel Committee on Banking Supervision, which represents central banks and regulators in 27 nations, announced new rules in September that aimed to avert another global banking crisis by forcing banks to bolster reserves.
ATEbank shares gained 2.8 percent in Athens trading to 73 cents before the earnings were announced. They are down 62 percent this year amid concern Greek banks may have to write down their holdings of government bonds. A swelling budget deficit led to soaring borrowing costs for Greece and a 110 billion-euro bailout by the EU and International Monetary Fund in May.
To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net;
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
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