Greece plans capital boost of over 1 billion euros for Eurobank: source

Fri Sep 27, 2013 4:56pm EDT
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By Laura Noonan and George Georgiopoulos

ATHENS (Reuters) - Greece's plan to return Eurobank to private ownership will see the country's fourth largest bank issue more than 1 billion euros ($1.35 billion)of new stock to private investors, boosting its capital ratio, a source familiar with the transaction said on Friday.

Eurobank (EURBr.AT: Quote) was the only one of Greece's four systemically important banks to have its summer 2013 recapitalization needs met solely by the Hellenic Financial Stability Fund (HFSF).

The HFSF, a bank rescue vehicle funded with 50 billion euros from the country's bailout by the European Union and International Monetary Fund, now owns 95 percent of Eurobank.

The fund has retained JP Morgan and Lazard to advise on ways to re-introduce private investors into the bank's share register ahead of a March 2014 deadline laid down by the IMF/EU chiefs overseeing Greece's sovereign bailout, three sources with knowledge of the process said.

The sources said HFSF has decided to issue new shares rather than selling on the shares it already owns, so the bank's capital position will be improved.

The additional capital will be "north of one billion euros", one of the sources said.

"It will be a capital increase," HFSF chairman Christos Sclavounis told Reuters, declining to comment on how much capital will be sought.

Other sources familiar with the process said the exact amount of the increase will be determined by the outcome of stress tests consultancy BlackRock is carrying out into Greek banks' capital positions. The results are due in December, but early indications may come ahead of this.   Continued...

A customer leaves a Eurobank branch in Athens April 10, 2013. REUTERS/John Kolesidis