National Bank of Greece SA, the country’s biggest lender, will seek shareholder approval to sell preferred shares to the Greek state in a bid to raise as much as 1 billion euros and boost capital.
The sale will boost the bank’s capital adequacy ratio to 11 percent from a current 9.5 percent, according to an Athens bourse filing today. A shareholder meeting will be held on Dec. 22.
Following the sale, the preferred shares will account for about 2 percent of National’s assets, compared with 0.5 percent today, according to the statement. The decision was taken to bolster capital amid a deteriorating situation in Greece and abroad.
National Bank had a net loss of 1.35 billion euros ($1.8 billion) in the first nine months of the year, compared with a 259 million-euro profit in the year-earlier period, the Athens-based lender said last month as it wrote down holdings of government debt and clients pulled deposits amid concerns in Greece over the country’s economy.
The business environment worsened in the final quarter of the year, with Greek bank deposits in October declining the most since Greece joined the euro in 2001 amid uncertainty over continued financing for the country from the European Union and International Monetary Fund. Former prime minister George Papandreou then roiled markets by planning a referendum on a second rescue package.
European Union leaders agreed on a 130 billion-euro bailout package for Greece on Oct. 26 after inspectors from the EU and the IMF determined that a 110 billion-euro bailout in May 2010 package wouldn’t be enough to keep the country’s debt to a sustainable level. The European Commission forecast last month that Greece’s debt would reach almost twice the size of its economy next year.