Piraeus Bank to perform a one-for-10 reverse stock split

Piraeus Bank announced on Wednesday the details of its share capital increase that will be preceded by a reverse stock split of one new share for 10 old ones, as National Bank has done. The Capital Market Commission is expected to approve the terms of the increase on Thursday.

That means that for every 1,000 old shares at yesterday’s price of 0.255 euros per share, Piraeus stakeholders will get 100 shares after the reverse split with the price at 2.55 euros. After the reverse split is completed the current 1,143,326,564 shares will be reduced to 114,332,657 chips.

The bank will then issue 4,958,235,292 new shares that will be sold to investors and the Hellenic Financial Stability Fund (HFSF) at the price of 1.70 euros apiece (or 0.17 euros before the reverse split). In theory each shareholder can get 35.68 new shares for each chip he holds so that the sum of the share capital increase of 7.33 billion euros will be collected.

In practice, however, Piraeus has already agreed with Portugal’s Millennium bcp and France’s Societe Generale for a total investment of 570 million euros; as a result Piraeus is targeting the collection of at least 163 million euros from investors so as to make the minimum threshold of 10 percent (733 million euros) that will allow the bank to retain its private status without having to issue converting bonds (CoCos).

The share capital increase is expected to be completed in the week from June 17 to 21, thereby bringing the recapitalization procedure of all four systemic banks to an end.

Thursday sees the start of trading of the warrant for the future acquisition of the National Bank shares that the HFSF is buying in the share capital increase process.

The starting price of the warrant is set at 4.45 euros and it will cease trading on June 7. The share capital increase will be completed by June 13.

Given that social security funds, which own some 13 percent of National’s shares, will not take part in the increase, they are likely to sell their buyback rights, thereby suppressing warrant prices.