Jodie, a gift for you...well worth the read: "One less private bank after the recapitalization"
30 April 2013 / 23:04:12 GRReporter
..."Currently, Eurobank is at the end of one cycle and at the beginning of another. This transitional period will be short and it requires everyone’s support in order to be able to reform the bank and return it as soon as possible within the private sector, where it belongs and can perform its true role of a leading private commercial bank," says Christodoulou.
He forecasts that the Financial Stability Fund, which obtains its funds from the European aid, will initiate the merger of smaller Greek banks to the system of Eurobank. The aim is to create a more powerful and stable financial institution that will attract foreign investors at a later stage...
"Interrupting the process of merger of Eurobank has created serious uncertainty in the investment condition of the bank." Potential investors do not know whether Eurobank will follow an independent course or the merger will continue, or what the ratio of the shares will be in the event that the National Bank of Greece had acquired Eurobank. The Bank will reduce its capital by reducing the total number of ordinary shares as reported by Naftemboriki. Ten old common shares will be converted into one new consolidated share, and it will cost 1.54 euro...
"...The situation of the National Bank of Greece (NBG) is better and it will not fall under state control. The bank needs 9.75 billion euro and it is planning to issue convertible bonds (Cocos) worth 1.9 billion euro. The National Bank of Greece expects to collect from private investors 12% of the funds required for recapitalization and to avoid nationalization.
The minimal participation of private investors in the process should reach 975.6 million euro. The bank estimates that the involvement of private investors may exceed 1.2 billion euro thus further strengthening the capital base of the financial institution.
The head of the NBG Alexandros Tourkolias stresses that the bank will not fall under the control of the government thanks to the hundreds of thousands of small and large shareholders. "The data available show that the goal is achievable," states Tourkolias in connection with retaining the private control of the NBG.
Until now, the difficult economic situation has forced the bank to introduce lighter conditions for the payment of loans worth six billion euro. However, the situation is not so severe, taking into account the fact that the bank has gained a 670 million euro pre-tax profit from its subsidiary Finasbank, and that the loans/deposits ratio for the fourth quarter of 2012 was below one hundred percent. Tourkolias notes that the merger of the NBG with Eurobank would have resulted in profits of over four billion euro, but it had to be interrupted in order for the recapitalization of the banking sector in the country to be completed..."