Bank draft law delay causes concern

Time is running low for Eurobank’s share capital increase to be completed by the end of January, as the vote in Parliament on the new bill concerning the equity ratios of Greece’s systemic banks has been put off until next month.

Finance Ministry sources say that the tabling of the draft law will not take place before early January. As for the possibility of changes to the terms on warrants, with the aim of returning banks to the private sector as soon as possible, the same sources note that the issue is still being examined and no final decisions have been made as yet.

Other sources, however, note that the planned changes to the warrants’ status have met with opposition from the country’s creditors, as they believe that taxpayers’ interests are not being safeguarded.

Eurobank officials acknowledge that the delay in the promotion of the necessary legislative framework creates problems for the capital increase and the bank’s target for the transaction to be completed within January.

February 12 is a landmark date because if the increase is not completed by that deadline, Eurobank will have to issue its 2013 financial results and use them for the terms of the increase that will have to be postponed until March at least. For the increase to make the February 12 deadline, the relevant bill will have to get clearance from Parliament by January 20 at the latest. However, many analysts doubt this will be possible given that the representatives of the country’s creditors are not due to return to Greece before January 10.

Although most officials agree that the Eurobank share capital increase must take place on market terms, some quarters argue that a certain cap has to be set on the discount with which the new shares will be given to private investors.

A change to the warrants’ framework is also under examination. Originally, the Hellenic Financial Stability Fund (HFSF), which issued the warrants, appeared to have adopted the proposals of certain consultants to acquire through a public offering the majority of the warrants trading on the market so that the HFSF can have direct control over the new shares and be able to sell them later to private investors on market terms, but nothing is certain for now.

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