National Bank of Greece SA, the country’s biggest lender, and Eurobank Ergasias SA both lost as much as a record 30 percent of their value in Athens trading after their plan for a merger was put on hold.
Eurobank fell 17 percent to 13 euro cents at 12:03 p.m. local time, the lowest since April 1999, while National Bank declined 30 percent to 36 cents, the most since September 1992. Alpha Bank SA fell 7 percent and Piraeus Bank SA (TPEIR) dropped 11 percent.
National Bank and Eurobank will be recapitalized separately, meaning their plan to merge has been halted, according to separate company statements on the website of the Athens Stock Exchange today. Both said they will hold shareholder meetings tomorrow to decide on capital increases.
Greece’s four biggest lenders need to raise 27.5 billion euros ($35.8 billion) after suffering losses in the country’s sovereign-debt restructuring last year. National Bank and Eurobank need a total of 15.6 billion euros, according to a Bank of Greece report released in December. The banks need to secure 10 percent of the common equity from private investors, with the Hellenic Financial Stability Fund providing the remainder.
“We estimate that there will be inability to gather 10 percent private-sector participation, so this is the basic assumption,” Konstantinos Manolopoulos, an analyst at Investment Bank of Greece, said by telephone today. “It will make no sense to invest in these two banks as investors will suffer dilution without the upside potential of warrants.”
The country’s stability fund, or HFSF, may prepare to recapitalize both banks if they are not able to raise set funds from the private sector, an official from the country’s finance ministry said yesterday. The HFSF will determine whether the merger will continue if it becomes the main shareholder in the two banks, the official said.