Eurobank admits it can’t find investors, passes over to HFSF

Eurobank Ergasias decided on Monday to put itself in the hands of the Greek state’s lender support fund, which will fully and immediately implement its recapitalization, and draft a strategy toward strengthening the lender via the acquisition of smaller banks in the local market.

The Hellenic Financial Stability Fund (HFSF) will cover the 5.8 billion euros that Eurobank requires to fulfill its sustainability criteria as early as next week, after the bank’s general meeting, thereby making it the first systemic lender to become fully recapitalized.

Eurobank officials said on MOnday that resorting to the HFSF, i.e. state control, is a way to lay the groundwork for the bank to restore its capacity for funding the Greek economy and for participating in a dynamic way in the strategic restructuring of the local credit system through the absorption of non-systemic lenders. They add that as the HFSF will cover its share capital increase in full, and that as there is no time restriction, the bank can return to private owners as early as possible.

Sources from Eurobank said that the decision for immediate recapitalization was the best way to go given that it was technically impossible for the bank to find private participation in its capital increase in such a short period of time, following the suspension of its merger with National Bank. After all, 85 percent of its shares are in National’s hands.

“With this decision,” Eurobank said in a statement on Monday, “the bank is responsibly addressing its shareholders and potential investors, is paving the way for restoring its capacity to fund the economy and is securing the trust of the clients and the employees of the bank as well as of the citizens.”

Also on Monday Piraeus Bank confirmed the completion of its absorption of Millennium Bank from Portugal’s Millennium BCP for 1 million euros. The Portuguese group will participate in the Greek lender’s share capital increase with 400 million euros, which means Piraeus has covered more than the 10 percent threshold in the increase required for it to retain its private character.

The deal will take the Piraeus group’s assets above 100 billion euros, its loan portfolio to 67 billion and its deposits to 55 billion euros.

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