Banco Comercial Portugues SA wants to repay the Portuguese state by the end of 2016 for the 3 billion euros ($3.8 billion) of hybrid securities it plans to buy from the country’s second-biggest bank by market value.
It expects to start the repayment in 2014, Lisbon-based Banco Comercial said today in a regulatory filing. The bank’s shares gained 7 percent to 9 euro cents in Lisbon trading, paring this year’s decline to 34 percent.
The recapitalization plan and strategic program will “reinforce its financial strength and recover profitability, allowing the bank to repay ahead of schedule the public investment and lay the foundation necessary to be prepared to face future challenges,” the bank said in the statement.
Banco Comercial, which plans to continue focusing on markets such as Poland, Mozambique and Angola, while reducing its holdings in Greece, said on June 4 that the state will buy the hybrid securities by the end of this month. The lender will also sell 500 million euros of new shares in a third-quarter sale underwritten by the Portuguese state at 4 cents each.
Portugal’s 78 billion-euro bailout plan earmarks as much as 12 billion euros to recapitalize its banks. Under the bailout’s terms, Portuguese banks were required to have a 9 percent core Tier 1 ratio at the end of last year and maintain that level through June after government bond holdings are written down to market prices. They must boost the ratio to 10 percent by the end of 2012.
After the capital increase, Banco Comercial plans to reach a core Tier 1 ratio of 9.6 percent at the end of June, following European Banking Association rules, and 12.5 percent at the end of December, according to Bank of Portugal regulations. The bank had a Tier 1 ratio of 9.3 percent at the end of December.