Banks encouraged by international interest in plans to cover capital requirements; National set to follow
The Piraeus Group will likely launch its 500-million-euro bond issue on Monday, while bank officials who have been busy promoting the issue at events in London and New York are reporting major investor interest.
International fund administrators reportedly believe that Greece is already on a growth trajectory and are estimating that the next few years could constitute a period of dynamic expansion for the country’s economy. They expect the local credit sector to benefit considerably as a result given that in previous years it had suffered severe pressure.
It appears that foreign investors are not too worried about the risk of political complications or a failure in negotiations between Greece and its creditors, so Piraeus officials are certain the issue will be covered with great success.
They add that international investors are also showing strong interest in the lender’s planned share capital increase, to amount to 1.75 billion euros.
Alpha Bank officials have also been promoting its prospective share capital increase of 1.2 billion euros outside the country. The Alpha mission will spend a total of almost two weeks in cities in Europe, America and Asia, where meetings with institutional investors have been scheduled.
Armed with the bank’s strong fundamental figures – Alpha was found to have the smallest capital needs among the country’s systemic banks – its officials appear particularly optimistic about the project, with the share increase fully guaranteed by its underwriters.
As for National Bank, its administration is working hard to complete the plan for the coverage of its capital requirements. Various alternatives are under examination, such as the issue of bonds and the sale of subsidiaries, holdings and other assets, while the final structure of National’s plan will also depend on the deadline it is given to amass the necessary capital.
Along with the announcement of its 2013 financial results, scheduled for Thursday, March 20, the bank will also present preliminary details regarding its plans and priorities for covering its capital needs.
Copper rose in London, narrowing the biggest weekly drop in almost a year, as a technical gauge suggested the slump was overdone. Nickel headed for a bull market on concern sanctions against Russia might limit supply. Prices slumped 12 percent this year, the most among the six main metals traded on the LME. Nickel led gains, rising 14 percent after Indonesia, the biggest producer of the metal from mines, barred ore exports in January. OAO GMK Norilsk Nickel, based in Moscow, is the world’s largest refined-nickel producer. “Supply concerns are the major driving force here (Indonesia, Russia),” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. Nickel for delivery in three months rose as high as $15,999 a ton on the LME. A close at that price would be a 20 percent gain from the four-year low reached Nov. 27, meeting the common definition of a bull market. The metal was last at $15,900.
Sudbury’s First Nickel is feeling optimistic about recent nickel price increases and improved price forecasts.
At the recent Prospectors and Developers Association of Canada conference held in Toronto, an analyst presented an assessment on nickel that included an increase in the long term price of nickel based on an upcoming supply shortfall.
Nickel has increased in value by 12 per cent from US $6.32 per pound on Dec. 31 to US $7.07 per pound on March 11.
"Improving nickel market dynamics are positive for First Nickel,” said Thomas Boehlert, company president and CEO in a March 12 release. “Higher prices result in higher revenue and an improved price outlook allows the company to consider options to extend mine life at Lockerby.”
First Nickel operates the Lockerby Mine in Sudbury, which reached full production in 2013 and is expected to produce 14 million pounds of contained nickel and 7 million pounds of contained copper in 2014.
“The company continues to focus on its key objectives which include maximizing the value of the Lockerby mine, protecting balance sheet liquidity, and building the asset base through acquisitions of base metal assets with the support of our major shareholders, Resource Capital Funds and West Face Capital."
oh that's an easy one Maria...all you have to do is go to Google finance...enter a symbol...look for zoom right above the chart....click on 10y and...Voila!
see you at $1
Economy Contracted Less Than Expected in Fourth Quarter of 2014, Data Show
Hopes for troubled Mediterranean country receive boost after data shows economy contracted less than expected in fourth quarter of 2014.
Greece’s economy contracted less than expected in the fourth quarter of last year, helping the country’s finances get off to a good start in 2014, according to figures published Tuesday.
Fresh data from Greece’s statistics service, Elstat, for the October-December period showed that gross domestic product contracted by an annual rate of 2.3% in the last quarter of 2013, less than a previous flash estimate of a 2.6% contraction.
It was the economy’s best performance since the first quarter of 2010.
The latest snapshot of the Greek economy boosts hopes that it will return to growth this year after six years of contraction. According to current budget forecasts, Greece’s economy is officially expected to expand by 0.6% in 2014.
Since entering recession in 2008, Greek GDP has shrunk by more than a quarter—made worse by the waves of austerity measures imposed by international creditors after 2010—while unemployment has reached a staggering 27.5% of the workforce.
However, the GDP figures come as Greece reports increasingly positive data over its public finances that, combined with the strengthening economy, have raised hopes in Athens that the country could soon begin to ease up on its harsh austerity drive.
On Tuesday, the Finance Ministry said in a statement that the country’s primary budget surplus, which doesn’t take into account interest payments, reached two billion euros, versus a 1 billion euro target for the first two months of the year.
Budget revenues for the two months hit #$%$9.5 billion, beating a #$%$9 billion target, while outlays reached #$%$9 billion, the data showed.
The state budget takes into account only the operations of Greece’s central government, and doesn’t include general government accounts, which comprise local government, a portion of military spending as well as some social welfare spending.
Data from Elstat on Tuesday also showed that Greece’s economic performance was weaker than expected in the first nine months of last year.
Third-quarter data was revised to show a drop of 3.2%—versus a 3.0% estimate beforehand—while the second quarter contracted 4.0%, worse than a previous 3.7% estimate. The first quarter was also revised down to show a 6.0% decline, down from a 5.5%.
However, even after those revisions the fourth-quarter data means that Greece’s economy contracted by an annual rate of 3.9% last year, beating a Greek government forecast of a 4% contraction.
The revisions by Elstat are part of a regular exercise by Europe’s statistics agency to keep their national accounts data up-to-date.
Reuters) - Alpha Bank, Greece's fourth-largest lender by assets, reported a profit in 2013, thanks to an accounting gain on its acquisition of Emporiki Bank, but without the one-off it was loss-making as provisions for bad debt weighed.
Including a 3.3 billion euro goodwill write-back on Emporiki that was booked in the first quarter, Alpha posted a net profit of 2.92 billion euros ($4.05 billion).
Excluding the write-back, the bank lost 304 million euros last year versus a loss of 1.087 billion in 2012.
Provisions for loan impairments rose 15.4 percent year-on-year in 2013 to 1.92 billion euros, the bank said on Monday.
Deutsche Bank for Greek Banks: The long road to recovery
Deutsche Bank forecasts a strong recovery in fundamentals for the Greek banking sector over the coming years, reflecting four principal drivers: 1) higher margins, as funding costs normalise; 2) improved fee generation, as economic activity recovers; 3) better cost efficiency, reflecting consolidation synergies and standalone initiatives; and 4) lower credit risk costs, as economic conditions improve.
Deutsche Bank initiates coverage of National Bank of Greece and of Alpha Bank in a report dated March 10, saying that the target prices also reflect its assumption that 25% of delinquent loans could become performing over time.
The bank stresses that after a very difficult period for the Greek banking sector, sees strong prospects for profit recovery and growth. For the first time in six years, real GDP growth is likely to move into modest positive territory in 2014. Improved confidence is driving down funding costs, a trend the bank expectw to continue this year and next. Credit risk costs are already falling; as the economic recovery picks up steam the Bank expects loan quality could also improve. Higher economic activity should support growth in fees, while significant sector consolidation opens the door to cost synergies and creates a more favourable long-term industry environment. For its coverage universe it sees revenue growth of 10% p.a. to 2018, and pre-provision profit growth of 18% pa.
The target price of 4.50 euro for National Bank of Greece offers 30% potential upside, says Deutsche Bank, which also stresses that NBG has better loan quality and liquidity than its peers and carries less integration risk, adding that recent pullback presents a buying opportunity. Also Deutsche Bank says that NBG is already profitable, while it sees ROA rising 30bps p.a. to 1.2% in 2018, when ROTE should reach 21.9%. Recent difficulties in Turkey have hurt sentiment, but its projections for this market are around 30% below the industry consensus, and it values NBG’s Turkish operations at a ~20% discount to current market value. Downside risks include the bank’s relatively lean capital base (10.2% CT1 ratio in 2013E).
As far as Alpha Bank is concerned, Deutsche Bank says that it has inferior loan quality and liquidity metrics relative to NBG, and therefore arguably should be better geared to the improving industry cycle. The Emporiki Bank acquisition should generate meaningful synergies, and it expects Alpha Bank to move into profit in 2015. It also sees ROA improving by 40bps p.a. from 2013, to reach 1.4% in 2018; ROE should rise to hit 11.7% in this year. However, considering also the recently announced EUR1.2bn capital increase, Deutsche Bank believes the current share price leaves the group fairly valued.
(Reuters) - Greece's central bank said on Thursday that a health check-up of the country's major banks showed they need 6.4 billion euros ($8.86 billion) in additional capital to withstand potential losses in the future.
That confirmed the results a banking source close to the talks had earlier told Reuters.
The stress test by BlackRock was run in December to assess whether last year's 28 billion euro recapitalisation of Greece's four biggest banks left them capable of absorbing new shocks as bad loans keep rising in the crisis-hit country.
The Bank of Greece said the country's largest lender National Bank needed an additional 2.18 billion euros, while No. 3 lender Eurobank's shortfall was estimated a 2.945 billion euros.
The stress test showed peers Piraeus Bank and Alpha had smaller capital deficits of 425 million and
262 million euros respectively.
David will do his usual talking heads circuit...until the whole world finally gets it...then we scream north!
David Einhorn's Greenlight Capital has added to an existing stake in Greece's Alpha Bank, making Alpha one of the hedge fund's top five holdings.
Greenlight Capital Re, a reinsurance company that invests in a portfolio managed by Einhorn, included Alpha Bank among its top five positions as of Feb. 28, according to its website. Greenlight Capital Re's money is invested in a separate fund, but the investments are intended to reflect the allocations in Einhorn's main hedge fund. A spokesman for Greenlight Capital declined to comment on the investment.
The position in Alpha could be worth several hundred million dollars or more, based on Greenlight Capital's regulatory filing dated Dec. 31. At that time, the fifth-largest position was Cigna, with a value of $368 million. Other big positions at the time included a $1.3 billion stake in Apple and a $697 million investment in General Motors.
Greenlight's moves come after other hedge funds including Daniel Loeb's Third Point have made successful bets on Greece. Third Point invested in Greek government debt when it traded at depressed levels and the market has gradually recovered. Greek government bond yields have settled below 10 percent after shooting above 30 percent at the height of the country's debt crisis.
Alpha Bank currently trades at 0.72 euros a share, up from a low of 0.25 euros last April. The stock has also had a good start to 2014, rising 15 percent.
Greenlight took the initial position sometime during the second quarter of 2013 when the stock was near its lows. At the time, Greenlight participated in recapitalization of Alpha Bank and Piraeus Bank, according to an investor letter. The hedge fund didn't specify how large the initial investment was, but said it included warrants that would allow it to buy more shares over a period of 4½ years.
In the letter last year, Greenlight said the bank should be able to cut costs over time as employment laws are revised and that business confidence was on the rise. It also said that Alpha was valued between 0.5 and 0.6 times tangible book value.
Alpha Bank's shares have fallen by about 95 percent since their peak in 2007.
Greek manufacturing expanded for a second consecutive month in February, adding to signs that the economy is stabilizing after a six-year recession.
A purchasing managers’ index rose to 51.3 last month from 51.2 in January, London-based Markit Economics said in a statement today. The index was below 50, the level distinguishing expansion from contraction, between August 2009 and the end of last year amid the country’s longest slump since World War II.
“The health of Greece’s manufacturing sector continued to improve during February,” Markit said in the statement. “Latest anecdotal evidence pointed to a strengthening of demand for Greek manufactured goods from both the domestic market and foreign clients. New export orders increased for the second straight month in February.”
The European Commission predicts Greece’s economy will grow 0.6 percent in 2014 after contracting for the previous six years. Adding to signs of improvement, economic sentiment in the country rose to the highest level in more than five years last month.
Greek government bonds have returned more than 17 percent this year, the most of all sovereigns tracked by Bloomberg. The yield on the country’s 10-year benchmark fell below the 7 percent last week for the first time since April 2010, just before Greece signed the first bailout agreement with its euro-area peers and the International Monetary Fund. The debt management agency sold 6-month treasury bills today at 3.6 percent, down from 4 percent in the previous auction on Feb. 4.
“All indicators show that the Greek economy has hit the bottom,” Manolis Galenianos, an economics professor at the University of London, said in a telephone interview. “But what we see is not yet a recovery, it’s just a stabilization. The lack of financing for investments and uncertainty weigh on growth prospects.”
The governor of the Bank of Greece, George Provopoulos, warned last week that political and social instability may yet derail the country’s projected economic recovery this year.
“Greece continues to face serious risks,” Holger Schmieding, chief economist at Berenberg Bank in London, said in an e-mailed note today. “The tail risk that the government may founder and that new elections could result in a government that would prefer to turn its back on Europe and the euro is not zero. But it is just a tail risk. The economic indicators show that there is light at the end of the tunnel.”
David Einhorn's Greenlight Capital has disclosed a very large position in Alpha Bank now one of the largest positions in the portfolio
Greece has been a popular location for value investors over the past couple of years. Dan Loeb, Seth Klarman are among famous investors who have bet big on Greece (we have an exclusive on Baupost out tomorrow, sign up for our newsletter to ensure you do not miss it). David Einhorn’s Greenlight Capital Re, Ltd. (NASDAQ:GLRE) appears to have joined club. According to new information posted on Greenlight Capital RE’s website, Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) is now one of David Einhorn’s top five largest positions.
The position is not new for Greenlight Capital. David Einhorn announced the position in Q213 stating:
Despite mostly reducing the portfolio, we added medium-sized long positions in ING U.S. (VOYA) and two Greek banks that were recapitalized: Alpha Bank A.E. (ALPHA GA) and Piraeus Bank S.A. (TPEIR GA).
However, the news is, that position is now among the top 5 holdings and could be over a $1 billion stake, if it is a bigger investment than David Einhorn’s holding in Apple Inc. (NASDAQ:AAPL). In any case the holding should be worth a few hundred million based on back of the envelope math. A request for comment from both Greenlight RE and Greenlight Capital was not immediately returned.
AFP) – Greece has energy deposits that could be worth 150 billion euros in state revenue over the next 30 years, Prime Minister Antonis Samaras said on Wednesday.
“There are very strong indications… that over the next 25-30 years, state tax revenue from (hydrocarbons) could reach 150 billion euros ($206 billion),” Samaras told reporters at the energy ministry.
The cash-strapped Greek state hopes for a windfall from hydrocarbon caches which it believes lie in the Ionian Sea and near Crete.
The gulf of Patras is thought to hold some 200 million barrels of crude oil, while another 50-80 million barrels are believed to lie near Ioannina and another three million barrels near Katakolo.
Greece in 2012 picked a Norwegian contractor to carry out seismic surveys in the Ionian Sea and south of Crete in search for oil and gas.
Drilling contracts for the region are to be issued later this year.
“We are completing the concession agreements for the gulf of Patras and Ioannina, where the indications are strongest, and they will be tabled for ratification by parliament,” Samaras said.
State proceeds from the concession are to be used to support the country’s struggling pension funds, and for scientific research, Samaras said.