Piraeus Bank, the country?s fourth-largest lender, got the green light from shareholders on Monday to issue new shares and convertible bonds in a move aimed at boosting its capital by just over a billion euros.
?We are shielding our balance sheet from possible risks,? the bank?s chairman, Michalis Sallas, told shareholders yesterday, noting that 2011 would be a difficult year. He said the terms of the rights issue would be announced by the board on January 3.
?The recession has led to a significant rise in nonperforming loans but the banking system has shown resilience as it had a relatively low leverage. Banks endured the crisis and are now strengthening their capital to help the economy even more,? Sallas said.
With the macroeconomic backdrop seen being tough in 2011 as the economy enters its third straight year of recession and liquidity still challenging, Greek lenders have opted for cash calls to be in a better position to cope with the downturn.
National Bank, the country?s largest lender, raised 1.8 billion euros in October, giving it access to interbank funding and credit lines with foreign lenders.
Piraeus shareholders cleared an 800-million-euro rights issue and a convertible bond issue for up to 250 million euros.
The move will bolster the bank?s capital adequacy, taking its Equity Tier I index to 9.5 percent and the Tier I index to 10.8 percent, with the total capital adequacy index reaching 11.7 percent, Piraeus suggested.
The share issue will amount to about 63 percent of Piraeus Bank?s current market value of 1.24 billion euros. Its shares eased 1.33 percent on the Athens bourse on Monday to 3.70 euros, versus a 3.22 percent dip on the broader market.
Brokers blamed the drop on the large cash call that will be completed at a discount, adding that some investors are selling Piraeus Bank shares to take part in the issue.
Shares will trade ex-rights on January 10, while trading in rights will run from January 17 to 25. The subscription period for the rights issue will end on January 31 and the new shares will be listed on February 10.