Alpha shareholders clear bond issue to Credit Agricole

Shareholders of Greece’s Alpha Bank approved a convertible bond issue to be placed with Credit Agricole as part of a deal to take over the French lender’s ailing Greek unit, Emporiki Bank.

They also empowered management on Thursday to make other bond and share issues to help raise the bank’s capital in line with the terms of the recent international bailout of Greece.

The convertible bond issue of up to 150 million euros will be privately placed with Credit Agricole under an agreement Alpha clinched in October to buy Emporiki.

Credit Agricole took a 2-billion-euro loss on the sale of loss-making Emporiki as it decided to pull out of economically troubled Greece.

Credit Agricole was the most exposed to Greece among French banks, which have spent the past year slashing investments there after an expansion spree during the boom times.

The shareholders also approved additional rights offerings and convertible bond issues to support the bank’s recapitalization next year.

No amounts or terms were set. Battered by rising loan impairments and losses from a sovereign debt swap in March this year, Greece’s viable banks will have to be recapitalized to restore their capital adequacy core Tier 1 ratio to at least 9 percent.

Greece and its international lenders have earmarked 50 billion euros from the country’s 130-billion-euro bailout to recapitalize viable banks and wind down others.

Under the plan, banks will have to issue new shares to achieve a core Tier 1 ratio of at least 6 percent and contingent convertible bonds, or CoCos, to boost it to 9 percent by end-April next year.

Alpha, Greece’s No 3 bank by assets, reported a loss of 711.8 million euros in the nine months to end-September.

It disclosed that its total recapitalization need as set by the central bank is 4.6 billion euros.