Big lenders say no to rights issue

Eurobank, Piraeus Bank say they will not follow in National’s tracks and increase share capital

Two of Greece’s largest lenders, EFG Eurobank and Piraeus, said yesterday they were not planning to go ahead with a rights issue after National Bank suprised the market this week by announcing a 1.25-billion-euro share capital increase.

“Eurobank is well capitalized and therefore in no need of a rights issue,” EFG’s chief executive officer, Nikos Nanopoulos, told Reuters. “We have strong and improving capital ratios, which are expected to increase organically further, because we’ll remain capital-accretive.”

National Bank said on Tuesday it would propose a rights issue of up to 1.25 billion euros at its board meeting scheduled to be held today.

National’s stock fell 10 percent on the Athens bourse after the announcement, on concerns the issue would dilute the company’s shares and was followed by a 3.83 percent retreat yesterday. The broader market lost 5.16 percent yesterday.

National Bank, which is present in 12 countries, argues the rights issue will give flexibility to its capital ahead of possible similiar moves from international rivals and will help it fund possible acquisitions abroad.

Experts said the news is likely to put pressure on other players in Greece’s banking sector to also improve their capital base.

However, Greece’s fourth-largest bank by market capitalization, Piraeus Bank, also said yesterday it is not planning a rights issue to improve its capital adequacy.

Piraeus Bank’s CEO Alex Manos said the bank had a strong capital adequacy with its Tier 1 ratio at 9.3 percent in March this year.

“In line with our planning, we believe that the group will achieve satisfactory levels of profitability in the future, capable of enhancing its capital adequacy further,” Manos said in a bourse filing.

He said including a private placement of treasury shares recently and the issue of preferred shares to the government for cash had brought the bank’s total capital adequacy ratio to 11.2 percent.