National Bank of Greece decided on Tuesday to sell its entire stake in its profit-making Turkish subsidiary Finansbank, in order to cover its capital requirements as determined by the stress tests. Meanwhile Eurobank has decided to cover its entire needs of 2.1 billion euros through a capital increase process starting on Monday.
National is planning to have its own capital increase of 1.6 billion euros by the end of the month – i.e. the precise level of its capital requirements according to the baseline scenario of the European Central Bank’s exercise – while expecting a boost of 780 million euros in shares from its bond swap plan. The adverse scenario has put its needs at 4.6 billion, so the remaining 2.3 billion euros will be covered by the Hellenic Financial Stability Fund (HFSF), mainly in contingent convertible bonds (CoCos) that the bank will pay off in 2016 after the Finansbank sale is completed.
In the coming days National will submit its detailed plan for the coverage of its needs, including the sale of Finansbank, to the ECB’s Single Supervisory Mechanism. National’s management is hoping that the decision to sell its Turkish subsidiary will lead to an immediate review of the Greek bank’s requirements, especially regarding the part of the needs that concerns international activities.
National’s foreign consultants have been keep an eye out for investment interest in Finansbank for some time now. Analysts estimate that the accounting value of the Turkish lender comes close to 3 billion euros, so the price will likely be slightly higher.
The result of last Sunday’s election in Turkey is expected to facilitate the sale of Finansbank, as the political and financial environment in the neighboring country appears to be reverting to normal after a long period of instability.
Eurobank’s management decided on Tuesday to proceed with its book building process from Monday up to next Friday, November 13, with priority being given to existing shareholders.
Piraeus Bank has called a general meeting for November 15 to decide on a share capital increase of 4.9 billion euros, while Alpha will hold its own meeting of shareholders a day earlier.