ATHENS: Greece’s third-largest lender Eurobank got approval yesterday from the country’s bank rescue fund, its main shareholder, for a €2.86bn share offering to plug a capital shortfall.
Eurobank expects the share offering to be completed by May, its board told shareholders yesterday. Eurobank will be the third Greek lender after Alpha Bank and Piraeus to tap capital markets to bolster it equity this year, as signs that Greece is starting to recover from its severe debt crisis are luring foreign investors back to battered Greek assets.
Athens returned to the bond market on Thursday after a four-year exile, raising €3bn with a five-year bond that was snapped up by foreign investors.
Alpha Bank and Piraeus raised a combined €2.95bn last month.
Eurobank, with a market value of €2.47bn and 95 percent owned by the Hellenic Financial Stability (HFSF) bank rescue fund, will proceed with a combined offering of new shares to international and domestic investors.
Current shareholders, including the HFSF, will waive their rights to the share issue, meaning the rescue fund’s current stake will be significantly diluted.
“Eurobank will take the big step to return to private ownership,” the bank’s CEO Christos Megalou told a shareholders’ meeting. “The capital increase will shield the bank with a capital adequacy that can meet the challenges of the future.”
Eurobank’s capital shortfall was revealed in a health check last month by the Greek central bank to see whether last year’s €28bn recapitalisation of the top four banks had left them with enough cash to withstand rising loan losses. It showed that Eurobank needed an extra €2.95bn.
Barclays, Deutsche Bank and JP Morgan will lead the bookbuilding to international investors and about 10 percent of the new shares will be offered to domestic investors, Megalou said.
The board of the HFSF rescue fund, which pumped €5.84bn at €1.54 a share to recapitalise Eurobank last year and became its majority owner, will convene on Monday to set a floor price for the new shares.
The price cannot be lower than €0.30, the par value of the bank’s existing shares, Eurobank’s board said. The HFSF may set the bar a bit higher.
The rescue fund has hired Lazard and Morgan Stanley as advisers to assess a fair value for Eurobank. Reuters
