Greek Lenders Place Postbank Bids as Cash Offers Discouraged

Greece’s biggest lenders all placed separate bids for state-controlled Hellenic Postbank SA even after the fund running the sale indicated that cash offers might be discouraged.

Eurobank Ergasias SA, Alpha Bank SA, National Bank of Greece SA and Piraeus Bank SA’s Geniki unit said in filings to the Athens stock exchange today that they had submitted binding offers for the lender, without elaborating on whether they are planning to use cash or shares for the purchase.

Goldman Sachs Group Inc., which is advising the Hellenic Financial Stability Fund, yesterday told bidders just hours before the offer deadline that the Bank of Greece is urging banks to reduce their dependency on the Emergency Liquidity Assistance, said an official at the HFSF who spoke on the condition of anonymity. The reiteration may be an effort to rule out cash offers, according to a person familiar with the sale, who asked not to be identified because the matter is private.

Stock offers are less attractive to Alpha, National Bank of Greece and Piraeus, which have remained outside full state control after raising funds from private investors. The Postbank sale will bring the country a step closer to meeting the conditions for the latest round of loans from its international bailout.

Toxic Assets

Under ELA, the euro area’s national central banks are able to provide emergency liquidity to lenders that are unable to raise collateral acceptable to the European Central Bank. Greek banks have borrowed 19.9 billion euros ($26 billion) from the ELA, central bank data show.

The HFSF last year took control of Hellenic Postbank and split into a so-called good bank and a bad bank, which will house its most toxic assets and will be retained by the government. By buying the Athens-based lender, which received 4 billion euros in capital after hiving off its bad assets, the purchaser will get access to about 12 billion euros of deposits. The bank has about 500 million euros of net assets.

The sale of the good bank must be agreed by July 15, according to terms of the country’s 240 billion-euro bailout agreed by the International Monetary Fund, ECB and the European Commission. Euro area finance ministers meeting in Brussels this week agreed to release 3 billion euros of loans for Greece provided the country meets its bailout targets for this month.

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