ECONOMY

Alpha announces €800 million plan to boost capital

alpha-announces-e800-million-plan-to-boost-capital

Alpha Bank said on Friday it had hired J.P. Morgan and Goldman Sachs as advisers on a plan to boost capital by about 800 million euros to fund growth plans.

“The proposed capital raising seeks to take advantage of favorable market conditions and the bank’s strong financial position,” Alpha said in a bourse filing.

The bank said it viewed prospects for the Greek economy as “especially positive” and that it wanted to support the government’s efforts to boost economic growth and attract foreign investment. The announcement drove Alpha’s shares down 27%.

“It’s a pretty standard reaction amid fears of dilution as new shares are issued at discounts to the prevailing market price,” said a banker who declined to be named.

Alpha’s total capital adequacy ratio was reported at 18.4% at the end of December while its core equity Tier 1 ratio stood at 17.3%.

“This is not about dealing with a capital shortfall, it is not a recapitalization. But Alpha’s equity story needs to be explained,” the banker said. Alpha says it already has adequate capital buffers to further reduce the risks in its balance sheet from impaired loans.

“This will be the first capital boost for growth by a Greek bank in years,” said another banker. “Alpha sees a unique opportunity to fund an expected investment-driven growth phase in Greece with new loans that will boost its profitability.”

Separately, sources told Reuters that Italian payments group Nexi was in talks with Alpha to take a stake in the Greek bank’s payment business for retailers. [Reuters]