Greece’s third-largest lender Alpha Bank said on Tuesday it will seek to raise 12 percent of the 4.571 billion euro it needs to recapitalise from private investors to remain privately run.
Greece’s four major banks need 27.5 billion euros in fresh funds to restore their solvency ratios to levels required by the country’s central bank after incurring losses from a sovereign debt writedown and impaired loans.
Alpha’s capital need has been set by the Bank of Greece at 4.571 billion euros.
Most of the funds will be provided by a state bank support fund – the Hellenic Financial Stability Fund (HFSF) – in exchange for new shares or contingent convertible bonds (CoCos).
Under the terms of the recapitalisation scheme, at least 10 percent of banks’ new common equity must be raised from the private sector, otherwise they will fall under the full control of the HFSF.
Greece’s international lenders have set aside 50 billion euros from the country’s bailout package to recapitalise its viable banks and cover the costs of winding down others that are deemed non-viable.
Detailing a plan announced last week, Alpha said it will hold a shareholders’ meeting on April 6 to seek approval for a 457.1 million euro rights offering.
The bank will raise another 92.9 million euros via new common shares, with existing shareholders waiving their rights. These shares will be privately placed with high-quality strategic and institutional investors, it said.
If Alpha succeeds in raising the minimum 10 percent of the capital need from the market, the remaining 4.113 billion euros will be supplied by the HFSF in exchange for new shares which will have restricted voting rights.
The issue price for the new common shares will be decided by Alpha’s board at the shareholders’ meeting.
As an incentive, private investors will get one warrant for each new common share for which they subscribe, enabling them to buy shares taken up by the HFSF fund. The warrants can be exercised semi-annually for a span of four-and-a-half years after their issue date.
The number of Alpha shares each warrant can buy from the HFSF fund will range from 7.31 to 9, depending on the take-up of the private sector, the bank said.
Warrants will be listed on the Athens stock exchange.