National Bank plans Finansbank sale to plug capital shortfall

National Bank plans Finansbank sale to plug capital shortfall

Greece's National Bank (NBG) said on Tuesday it planned to sell its Turkish unit Finansbank to plug a capital shortfall identified in European Central Bank (ECB) stress tests.

The bank said it planned the sale of 100 percent of Finansbank, with proceeds yet to be determined. The tangible book value (TBV) of the asset was 3.4 billion euros ($3.7 billion), it said in an investor presentation.

It said the process was at a relatively advanced stage, but did not identify the potential buyer or buyers and did not give a timeframe for the deal to be completed.

A health check by the ECB last weekend showed the four main Greek banks had a 4.4 billion euro capital shortfall under a "baseline" scenario of normal economic conditions prevailing in the country, and a 14.4 billion euro gap under an adverse scenario.

NBG had a capital shortfall of 4.6 billion euros under the adverse scenario.

Greece was forced to agree to a third international bailout of up to 86 billion euros from international creditors this year after it came close to toppling out of the euro zone. Banks were shut for three weeks to prevent a drain on deposits and capital controls are still in force.

If Greek banks cover the baseline 4.4 billion gap from private investors, the state bank bailout fund HFSF will supply the remainder, up to the 14.4 billion defined in adverse conditions, by buying a mix of new shares and contingent convertible bonds (CoCos), which convert to equity if capital buffers fall below a certain level.

But Greek banks are wary of too heavy an involvement by the HFSF, which could dilute the level of private ownership.


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