NBG denies M&A talk; shares fall

Greece’s largest lender National Bank (NBG) is not eyeing any immediate moves to merge with or acquire another bank after announcing a 2.8-billion-euro plan to boost capital, its chief executive said yesterday. «We don’t have immediate plans for a merger and acquisition transaction. We are not discussing deals with any other banks,» CEO Apostolos Tamvakakis told analysts in a conference call. NBG will offer existing investors 121.4 million new shares at 5.20 euros apiece to raise 631 million euros. It will also issue convertible bonds to raise 1.18 billion euros and sell up to 25 percent of its Turkish unit, Finansbank. NBG shares tumbled 6.44 percent yesterday to 9.73 euros, trimming mid-session losses of 10 percent, with investors pricing in the impact of earnings-per-share dilution arising from the rights issue. The broader market lost 1.96 percent. Shut out from wholesale funding markets, Greek banks are now the eurozone periphery’s biggest users of European Central Bank liquidity facilities relative to the size of the country’s banking system. ECB funding reached 96.2 billion euros in July, about 20 percent of the Greek system’s total assets, while household and business deposits are down 11 percent so far this year. The cash from the plan to boost capital will help NBG repay 350 million euros of preferred shares it sold the government under a previous liquidity support plan and boost the confidence of funding counterparties and depositors. Analysts said NBG’s plan made sense and could be followed by other banks as they try to disengage from the state and bolster their capital cushions. «The total amount to be raised is significantly higher than market expectations of 1.0-1.5 billion euros,» UBS analyst Alexander Kyrtsis said in a note to investors. «It is strategically the right move for NBG and, on preliminary estimates, the deal is about 30 percent earnings-per-share dilutive.»

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