Piraeus Bank SA (TPEIR) rose as much as 17 percent after agreeing to buy Banco Comercial Portugues SA (BCP)’s Greek unit in a deal that will see the Portuguese lender participate in Piraeus’s share sale.
Piraeus advanced 15 percent to 23 euro cents at 2:50 p.m. in Athens today, its biggest increase since April 10. The stock has risen 29 percent since April 16, giving the lender a market value of 263 million euros ($343 million).
BCP announced today that it would sell its Greek unit, Millennium Bank, to Piraeus for 1 million euros ($1.3 million) and contribute 400 million euros in Piraeus’s forthcoming capital increase as a condition of the sale. Combined with Societe Generale SA (GLE)’s contribution of about 170 million euros after selling its Geniki unit to Piraeus last year, the deal means Piraeus will raise the 533 million euros it needs from private investors to avoid the state taking it over.
“This is a very positive development,” Euroxx Securities analyst Maria Kanellopoulou said in an e-mailed note. “With this transaction the bank more than covers the 10 percent private sector’s minimum participation in the forthcoming rights issue.”
Under the terms of Greece’s bailout from the European Union and International Monetary Fund, Greece’s four biggest banks need to raise 27.5 billion euros through a mix of common equity and convertible bonds. Lenders that fail to raise 10 percent of the equity from private investors will cede management control to the Hellenic Financial Stability Fund.
Piraeus must raise 7.3 billion euros in total, and has shareholder approval to issue 2 billion euros in contingent convertible bonds to the HFSF, which will also subscribe to the remaining common equity in the rights offer.
The bank will now target gathering an additional 164 million euros, which will allow the lender to avoid issuing the more expensive convertible bonds, according to Kanellopoulou.
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