National Bank of Greece Tumbles on Plan to Raise $3.6 Billion of Capital
National Bank of Greece CEO Apostolos Tamvakakis
Kostas Tsironis/Bloomberg
National Bank of Greece CEO Apostolos Tamvakakis said the funding will strengthen the bank and help it expand.
National Bank of Greece CEO Apostolos Tamvakakis said the funding will strengthen the bank and help it expand. Photographer: Kostas Tsironis/Bloomberg
National Bank of Greece SA, the nation’s largest lender, dropped as much as 12 percent in Athens trading as it announced plans to raise 2.8 billion euros ($3.6 billion) to strengthen capital and fund expansion.
The Athens-based lender will offer existing investors 121.4 million new shares at 5.2 euros apiece to raise 631 million euros, National Bank said yesterday in a statement. It will also issue convertible bonds to raise 1.18 billion euros and sell part of its Turkish unit.
“It’s a bold move that makes a lot of sense,” Alexander Kyrtsis, an analyst at UBS AG in London, said in a note to clients today. The total amount that National Bank plans to raise is “significantly higher” than market expectations of 1 billion euros to 1.5 billion euros, he said.
Greek banks face soaring loan losses and a potential contraction in lending as the government implements austerity measures following the country’s 110 billion-euro bailout in May. National Bank is relying on markets outside Greece, including its Finansbank unit in Turkey, to boost profit.
The lender dropped 7.7 percent to 9.60 euros at 1 p.m. local time, sliding for a second day and leading other financial stocks lower. EFG Eurobank Ergasias SA, the country’s No. 2 bank, fell 4.5 percent to 5.11 euros, while Alpha Bank SA, the third-biggest lender, declined 3.7 percent to 5.23 euros. Piraeus Bank SA, the No. 4, lost 6.4 percent to 3.96 euros.
The funding will strengthen the bank and help it expand, Chief Executive Officer Apostolos Tamvakakis said on a conference call today. Tier 1 capital, a measure of financial strength, will rise to 14.6 percent from 10.7 percent at the end of June.
The bank plans to sell a minority stake in Turkish unit Finansbank AS, keeping its holding at least at 75 percent.
To contact the reporter on this story: Natalie Weeks in Athens nweeks2@bloomberg.net
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