Greek Banks’ Capital Increases Signal End to IsolationNikos Chrysoloras and Eleni Chrepa
Alpha Bank SA and Piraeus Bank SA raised 2.95 billion euros ($4.07 billion) in new capital from foreign investors in the latest sign Greek lenders are bouncing back from the world’s biggest sovereign debt crisis that pushed them into isolation from international money markets.
“We have a bull market,” Dimitris Giannoulis, co-founder of ResearchGreece, an independent research provider based in Cyprus, said by phone. “The enormous demand and oversubscription show that there is huge interest in Greek banking stocks. Those that believe in the recovery story are more than those that don’t.”
Piraeus Bank, Greece’s second-biggest lender, said today that it will raise 1.75 billion euros of capital after placing 1.03 billion new ordinary shares at 1.70 euros each. Alpha Bank, Greece’s fourth-largest by assets, said yesterday it also had enough demand for a capital increase of 1.2 billion euros. It will price the sale of new shares at 65 euro cents apiece. Shareholders for both banks will be asked to approve the transactions on Friday.
Piraeus shares closed down 5.9 percent in Athens on the news of the capital increase as new shares will be offered at 1.70 euros, while the shares closed at 2.02 euros on March 24, the last day of trading before the book opened. Alpha, which announced the results of its own book-building yesterday, was up 4.3 percent.
“International investors offered about 5.5 billion euros for both banks,” Piraeus President Michalis Sallas said in a statement issued after the announcement of the book-building result. “We believe that both capital raises are of historical importance for the Greek banking market and will contribute significantly to the recovery effort of the Greek economy.”
Greek lenders need to boost their capital by 6.38 billion euros, the nation’s central bank said this month as it released the results of an asset-quality review and a stress test conducted by BlackRock Inc., the world’s largest money manager.
Officials from the European Commission, the European Central Bank and the International Monetary Fund, which financed Greece’s bailout, said in a statement last week that the bill may be even bigger if the country’s banks don’t “urgently and efficiently address” swelling bad loans in their books.