Greek Banks Said to Lure Buyers to Avoid Full State ControlElisa Martinuzzi and Christos Ziotis
National Bank of Greece SA and Piraeus Bank SA have secured sufficient backing from private investors for their capital raisings to enable the lenders to avert complete nationalization, according to people with direct knowledge of the transactions.
National Bank, the country’s biggest lender, received orders from private investors for more than 975 million euros ($1.3 billion) in stock, the minimum required to avoid complete state backing, said an official at the Athens-based bank, who asked not to be identified in line with company policy. Bids from investors exceeded 1.1 billion euros, enabling the bank to avoid selling contingent convertible bonds, the official said.
Piraeus Bank also has enough orders for 500 million euros of bonds that convert into stock and allows the bank to retain some independence, according to a person with knowledge of the sale, who asked not to be identified because the transaction is private. Both transactions close today.
The nation’s four systemically important lenders are seeking to raise 28.5 billion euros to restore their buffers after the sovereign debt restructuring wiped out capital. Investors buying stock now are betting on the lenders’ ability to revive profit amid a recession and a threat of political uncertainty after the Greek government shut the country’s public broadcaster this week.
“The banks that have attracted private investors will retain some management flexibility though they may be constrained in some strategic decisions,” said Alexander Kyrtsis, a European banks specialist at UBS AG in London. “This is the best case scenario given the circumstances.”
Greek banks still face “significant asset quality and profitability pressures which if not contained could lead to renewed capital weakness and funding vulnerabilities,” Fitch Ratings said in a note today. Bad loans will continue to rise this year, though at a slower pace than in 2012, the ratings company said.
The government will take full control of banks that can’t find private investors, an outcome already sought by Eurobank Ergasias SA’s management. Funds will be provided by the state-owned Hellenic Financial Stability Fund, which is backed by a 50 billion-euro package pledged by the euro area and International Monetary Fund.
Alpha Bank SA also raised sufficient funds from private investors in a rights offering completed earlier this month.
Investors can order shares of Piraeus, the country’s second-biggest bank, through June 25. Bank of America Corp., Barclays Plc, Deutsche Bank AG and Goldman Sachs Group Inc. are managing the sale of exchangeable bonds.