Banks // Increasing press reports on bank warrant public offer
In two separate press reports over the course of the last couple of days, there
have been citations of plans to expedite the re-privatization of Greek Banks that
have outstanding warrants (Alpha, NBG, Piraeus). We note that the HFSF owns
the majority of (80%-85%) these banks against which it has written 54-month
warrants with a semi-annual exercise period. The idea now is to have the HFSF
make a public offer for the outstanding warrants in exchange for shares as
opposed to cash. In the scenario that the HFSF is successful in retiring the
majority of warrants, it would then be free to proceed with placement of these
banks shares as it sees fit, thus expediting their respective re-privatization as
opposed to being restricted by the written warrants. Our understanding is that
these are thoughts on a possible architecture of re-privatizing the banks held
(much like there have been multiple non-paper proposals in the past), rather
than actual government-troika agenda items.
Good find. Yes, Pagratis, a Greek economist, has been writing about alternatives to the present setup with the warrants. Maybe the HSFS will consider a safer way to handle the warrants that doesn’t require guessing about the results – too many too early/diluting share price(?)- too late/discouraging democratic initiatives for a free economy. Either way, whether handled with warrants or selling the shares in the open market, the HSFS gets paid back (and sooner on open mkt). Or will the HSFS not consider any arrangement other than one that assures the same bankers maintain control of the banks as the warrants are only exercisable by those select few.
Some investors were concerned when the UK gov began selling their stake in Lloyds. However, the first sale went fine – they sold only to institutions in the UK and U.S. The gov is spacing out the placements every 90 days. Inst. had no incentive to immediately flood the market by reselling as what they paid (4.84 USD) was about the same as the price listed on the exchange.