Share capital increases of National, Eurobank take their course

By Yiannis Papadoyiannis

The National Bank of Greece board is meeting on Tuesday to confirm the plan for the coverage of the lender’s capital requirements and for its share capital increase. Sources say that the increase will amount to about 2.5 billion euros and be supplementary to the strategy for creating capital by the sale of assets.

Although the original plan was for the whole of the requirements – i.e. 2.183 billion euros as determined by the Bank of Greece – to be covered through the sale of subsidiaries and property assets, bank officials eventually decided to resort to the capital market too.

That change of strategy was due to the favorable investment climate thanks to the country’s return to a course of growth and its successful return to the bond market, the positive response by the institutional authorities and the favorable feedback by shareholders – even though yesterday the bank’s shares gave up over 12 percent on news of the planned share capital increase. The bank’s administration therefore gave its nod for the increase, which will proceed immediately with help from Morgan Stanley and Credit Suisse. The increase will not only strengthen the NBG capital base decisively; it will also secure more time for the creation of capital through the sale of assets, thereby securing better terms as it will be under less pressure.

Eurobank’s share capital increase has also taken its course, with its major shareholder, the Hellenic Financial Stability Fund (HFSF), reportedly determining the minimum share price at 0.30 euros for the process. Already Eurobank officials have traveled abroad to hold contacts with strategic investors, so that the increase can be completed by April 30.

The HFSF board convened on Monday...