Alpha Bank and Eurobank became the latest Greek lenders to launch liability management exercises this week as they scramble to fill capital holes.
The two have joined Piraeus Bank, which began a similar exercise in the middle of October, in the hope that they will subsequently be in a good position to raise capital privately.
And just like with Piraeus, senior bondholders in both banks will potentially play a big part in plugging any capital shortfall.
“It gives a glimpse into the future and how burden-sharing will work in Europe,” said a banker on Friday.
“It is the first time to my knowledge that we will see senior [bonds] play such a big part in recapitalizing banks.”
Alpha is looking to exchange 27 subordinated and senior bonds – originally amounting to 2.79 billion, of which 1.08 billion remains outstanding – for so-called non-transferable receipts.
Eurobank is targeting 20 subordinated and senior securities originally amounting to around 2.71 billion-equivalent and with some 877 million now outstanding.
“The regulatory backdrop for all these offerings is the same: If the banks require state aid, there will be mandatory burden-sharing on the debt and equity,” the banker said.