Piraeus Bank plans 1 bln boost

Piraeus Bank is picking up the baton in the race for capital boosts among Greek lenders, making plans for a capital increase to exceed 1 billion euros, it announced yesterday. The country’s fourth-largest bank is planning to shield its capital adequacy for 2011 with 800 million euros in cash from new shares in January and with 250 million through the issuance of convertible bonds in the summer, for a total of 1.05 billion euros. Piraeus will be the third Greek bank to proceed with a significant capital boost, after National Bank raised 1.8 billion euros this month and Geniki has an ongoing increase of 339 million euros. The strengthening of banks’ capital base is deemed necessary due to the deterioration of the financial conditions in Greece, the uncertainties of the global economy and the upcoming changes in monitoring. In last summer’s stress test by the European Central Bank, Piraeus marginally made the cut. The lender’s administration has argued that the proposed increase is aimed at improving its capital adequacy in view of a stricter monitoring framework and in order to respond to the increased expectations of the investment community. The bank also aims to strengthen its position within the context of Greece’s macroeconomic conditions and allow itself to utilize the attractive opportunities for growth in the region. The final decisions will be made at the extraordinary general meeting of the bank’s shareholders, set for November 23. «This is an important step for Piraeus Bank, leading us to further strengthening our capital base in a demanding environment and putting us in a position to benefit from a possible improvement in financial conditions,» said Piraeus Bank Chairman Michalis Sallas. The lender announced it had underwriting commitments for the full amount of the share issue from Barclays Capital, Credit Suisse, Goldman Sachs and Morgan Stanley, who will jointly act as global coordinators. Drawing 800 million euros will take the bank’s capital adequacy Equity Tier I index to 9.5 percent and the Tier I index to 10.8 percent pro forma, based on June 30, 2010, data. Its total capital adequacy index would rise to 11.6 percent.

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