Old shareholders in banks will see their stakes vanish into thin air as the share capital increases in the context of the credit sector’s recapitalization will be completed at far lower prices than the already low levels of the banks’ stocks on the bourse. Market officials say that the increases will be conducted at a discount of 40 to 50 percent from yesterday stock closing.
On Tuesday Alpha Bank’s and Eurobank’s books effectively closed as the two lenders have drawn the entire amounts they needed from the market. National will soon close its book too. Piraeus Bank is increasing its efforts as it has the greatest capital requirements and must now face the rapid deterioration of conditions in the previous days – although the sealing of the agreement between Athens and its creditors will work in its favor.
Representatives of institutional portfolios say that even in cases where strong investor interest has led to a rapid concentration of the amounts required (as in the cases of Alpha and Eurobank), the prices on which the books are closing are considerably below the stock prices.
Given that in comparison with the summer of 2014 (before the country realized that a general election and a change in government were coming) the prices have fallen by 85.8 percent for National Bank, 90.6 percent for Alpha, 93.5 percent for Eurobank and 97.7 percent for Piraeus, the implementation of the capital increases on even lower prices effectively sees the value of existing stocks evaporate altogether.
Credit sector officials acknowledge that in the current context, considering the condition of the country and its banking system after the turmoil of the last few months, the priority is in finding the necessary funds, and the price is a secondary consideration. Analysts say that even after Tuesday’s 7 percent slide of the banks index at the bourse, the capital increases will be conducted at prices with a 40 percent or 50 percent discount, or an even greater reduction in some cases.