National Bank of Greece (ADR)(NYSE:NBG) has managed to win approval from investors to strengthen its capital with the help of share offering of 9.75 billion Euros in an effort to secure enough support from private shareholders to break out of state control.
Leading banks in Greece are expecting to benefit from shoring up their capital capability. It could help them resume access to interbank markets and finance the economy out of the long term recession it is going through.
The four major lenders require 27.5 billion Euros in new capital to reinstate their solvency ratios to the levels needed by the central bank of the country after suffering losses from impaired la\oans and debt writedowns.
CEO of NBG, Alexandros Tourkolias has told investors at a meeting that the banks will have the funds to put in money to reverse the direction of the economy.
A major portion of the funds will be provided by the Hellenic Financial Stability Fund in exchange for shares or contingent convertible bonds.
NBG is planning on raising up to 12% from private shareholders that would help it maintain its status of privately operated.
A minimum of 10% of new common equity of banks must be raised from the private sector in order to ensure that they remain privately operated banks.
Alpha Bank and Piraeus are predicted to meet the target of 10%. Eurobank, the fourth largest bank, has given up on its fundraising efforts and has chosen to be categorized under the full control of HFSF.
NBG is aiming to raise a maximum of 1.171 billion Euros under the approved plan through a rights issue.
Shareholders, who are engaging themselves in the rights issue, will get warrants in case the target of 12% is met. This would entitle them to own 7.33 shares back from HFSF fund per share they subscribe for.