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National Bank of Greece Offers to Buy Back $2.5 Billion Debt

The National Bank of Greece SA Headquarters
National Bank of Greece SA, the country’s biggest lender, offered to repurchase about $2.5 billion of bonds and hybrid securities to boost capital amid Europe’s sovereign debt crisis. Photographer: Kostas Tsironis/Bloomberg

Jan. 3 (Bloomberg) -- National Bank of Greece SA, the country’s biggest lender, offered to repurchase about $2.5 billion of bonds and hybrid securities to boost capital amid Europe’s sovereign debt crisis.

National Bank sought to buy back 1.5 billion euros ($2 billion) of 3.875 percent covered bonds due in October 2016 as well as five series of preferred securities in euros, dollars and pounds, it said in an e-mailed statement. The Athens-based lender offered to pay 70 percent of face value for the covered bonds and 45 percent for the preferred hybrids, below where they were issued and above where they’re currently trading.

“The purpose of the offers is to generate core Tier 1 capital for the group and to strengthen the quality of its capital base,” the bank said. “The offers would generate a gain for the group.”

Buying back debt at a discount to face value generates a gain in so-called core Tier 1 capital after Greek banks’ holdings of government bonds diminished this cushion against losses, sent stock prices plummeting and prompted depositors to move savings overseas. The government in Athens is negotiating a debt swap with bondholders to secure more international financing, which may further hurt lenders’ capital.

Price Jump

National Bank’s covered bonds, which were issued at 99.24 cents on the euro in September 2009, were quoted at 63.5 cents as of 11:05 a.m. in London, after jumping from 50.7 cents yesterday, according to DZ Bank AG prices.

The lender’s 117.5 million euros of floating-rate perpetual preferred securities callable in 2013 were priced at 100 cents in June 2003, Bloomberg data show. They were quoted at 40 cents by Jefferies Intl. today, double the price on Dec. 21, 2011.

Credit Suisse Group AG, Deutsche Bank AG, Bank of America Merrill Lynch and Morgan Stanley are managing the tender, according to the statement.

National Bank completed a 1 billion-euro issue of preferred shares to the Greek state last week, raising the core Tier 1 ratio to more than 11 percent, according to a statement yesterday. Greek banks have been required since the beginning of this year to hold capital equal to 10 percent of their assets weighted by risk.

To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net

To contact the editors responsible for this story: Angela Cullen at acullen8@bloomberg.net; Paul Armstrong at parmstrong10@bloomberg.net

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