National Bank sources made clear on Wednesday that the upcoming 2.5-billion-euro share capital increase is to ensure that the group retains its majority stake in Turkish subsidiary Finansbank and its presence in the major market of Turkey.
The same sources stressed that despite the strong pressure it has been experiencing, the group is not discussing the sale of a controlling stake in the Turkish lender, while the concession of a share close to 40 percent will be done gradually and depending on market conditions.
Kathimerini has learned that certain members of the Hellenic Financial Stability Fund (HFSF), which has controlled National since its recapitalization last year, voted against a share capital increase and instead asked for the sale of Finansbank.
After the decision in favor of the 2.5-billion-euro share increase and with the sale of assets totaling 1.04 billion – already approved by the Bank of Greece – National will find itself overcapitalized, given that the bulk of the capital requirements that emerged during the stress test were a result of exposure to Turkey and the particularly conservative approach to the course of the neighboring country’s economy.
The BlackRock stress test had foreseen Turkey’s economy contracting at an annual 3 percent clip, while according to international agencies’ revised estimates Turkey will enjoy a growth rate of more than 2.3 percent in 2014 and of 3.1 percent in 2015, with the World Bank holding an even more optimistic view as it forecasts growth at 2.4 percent this year and 3.5 percent next year.
The first-quarter results confirm that Finansbank is on a dynamic course, as despite the challenges it produced significant gains, compared to the losses factored in by the stress test. Now that the situation in Turkey has by and large reverted to normal, the likeliest scenario is for the country’s economy to grow, which means that Finansbank will not only avoid burdening its parent group with losses but it will also constitute a significant source of profits for National. Consequently most of the capital requirements of the stress test will not be confirmed and the lender will end up with a particularly high capital stock.
Following the PSI debt restructuring, National had found itself with negative capital, but after its management’s actions during the last few months and the capital increase it will have capital of about 7 billion euros.