Eurobank to buy back hybrid bonds

Greece’s fourth-largest lender Eurobank Ergasias said on Wednesday it plans to buy back up to 580 million euros of notes it had issued in exchange for new common shares as part of moves to boost its capital base.

Greece’s four big banks, including Eurobank, will be recapitalized with 27.5 billion euros to restore their solvency and such liability management moves are required under a bailout scheme funded by the country’s international lenders.

Eurobank aims to buy back five series of hybrid securities and a subordinated note at their nominal value, offering holders new common shares at the same price as those issued to a bank rescue fund covering its 5.84-billion-euro capital need.

Eurobank, which has about 633 million euros outstanding in these securities, will seek shareholder approval for the plan on May 30 and expects to complete the buyback in June.

The new shares to be issued will be privately placed with the holders of the tendered notes, with existing shareholders waiving their rights.

Peer Alpha Bank last month launched a similar offer to repurchase hybrid bonds at a discount.

On Tuesday Eurobank chief financial officer Paula Hadjisotiriou said the lender will issue new shares under its recapitalization plan at a price of 1.541 euros after being adjusted for a 10-for-1 reverse split.