In London Piraeus Bank started on Wednesday the book building process for its share capital increase, aiming to draw at least 1.6 billion euros, as all banks are gearing up for the coverage of their capital requirements.
Piraeus’s book building process is expected to end on Friday, with bank officials appearing certain of the success of this attempt. The baseline scenario of the European Central Bank stress test found that Piraeus’s capital needs amount to 2.2 billion euros, but 600 million of that will be covered by a debt/equity swap. Eurobank will start its book building process on Monday, with Alpha set to follow.
The third recapitalization of the sector will lead to a drastic reduction in the state’s holdings in the banking system. Even if the Hellenic Financial Stability Fund (HFSF) covers a significant part of the banks’ requirements, it will see its stakes in the four systemic lenders shrink well below 50 percent, from being the majority shareholder in three of them. This will take the majority of banks’ shares back into private hands for the first time since 2013, when the HFSF recapitalized the credit sector.
Eurobank and Alpha stand a very good chance of covering all their needs without requiring any state assistance. In that case the HFSF will see its stakes shrink to 7.3 percent in Eurobank and about 25 percent in Alpha. Even in National and Piraeus, the state holding will diminish considerably. Only if private investors abstain from the recap process will the state’s stake grow.
Notably, one of the main points of the SYRIZA “renegotiation” had concerned the strengthening of state control in banks.
In spring 2014 it had opposed the privatization of Eurobank at a price of 0.310 euros per share, saying the transaction was at too low a price.
Now the new share capital increase will take place at a price close to 0.038 euros per share, or 87 percent lower than the price achieved in 2014.