Home > EFG Eurobank, Eurostat, National Bank of Greece, Piraeus Bank > NATIONAL BANK OF GREECE : BACK TO THE FUTURE…


September 10, 2010 Leave a comment Go to comments

“In Greece the banks didn’t sink the country. The country sank the banks.”

Ενω οι αρχές της ΕΕ συνεχίζουν μέσω της Eurostat τις έρευνες για την αποκάλυψη του πραγματικού χρέους της χώρας που κρύβεται ακόμα μέσα στις ντουλάπες με τους σκελετούς των μη αποκαλυφθέντων εισέτι swaps της Goldman Sachs και των λοιπών συνεργαζομένων τοκογλύφων, η Εθνική Τράπεζα της Ελλάδας προχωράει πρώτη σε κινήσεις θωράκισής της just in case
Η ημερομηνία δημοσιοποίησης του κρυφού χρέους από την Eurostat  έχει ορισθεί για τις 22 Οκτωβρίου 2010. (now aims to publish a “solid estimate” of the total value of so-called off-market swaps on Oct. 22 ).

NBG’s Greek debt warning

Posted by Neil Hume on Sep 08 09:30.

The most denied cash call of recent times has finally happened. Late on Tuesday night National Bank of Greece announced a €2.8bn ‘Comprehensive Capital Strengthening Plan:

Successful completion of both components of the Capital Plan is expected to raise approximately Euro 2.8 billion of additional Core Tier 1 capital representing an increase of Core Tier 1 capital ratio of approximately 380 basis points. The net proceeds to be realised from the Finansbank Offering will ultimately depend on a number of factors including prevailing market conditions, offer size and structure. Assuming successful completion of the Capital Plan, our Core Tier 1 capital ratio would have been 13.4% as at 30 June 2010, including the impact from the Euro 450 million Tier 2 capital issuance, which was completed in August, and which constituted the first step towards completion of our Capital Plan.

NBG says the equity issue and disposal will ‘create an additional, sizeable capital buffer to face the macro-economic situation in Greece in the short-to-medium term’.

But what does that mean? Could it be that NBG is raising the money to cover a Greek government bond haircut? Very possibly.
Indeed, its interesting to note that while NBG’s chief executive Apostolos Tamvakakis doesn’t think the Greek government will default he doesn’t say anything about a restructuring:


As a reminder, NBG carries its Greek government bond portfolio at a 10 per cent discount in its books. According to analysts a €2.8bn capital raise would cover an additional 13 per cent haircut and pretty severe restructuring.
Now, if a Greek debt restructuring is coming down the slipway the banks you don’t want to be owning are Piraeus and Eurobank.
This snippet, from a recent Unicredit note, explains why.
If we take the above analysis one step further and look at a debt maturity extension of 5 years alongside a halving of the coupon for all debt, the impact on the banks is much more painful.
This leaves on average haircuts of 23% for GGBs from par, and writedowns at the Greek banks of on average 21% (as not all bonds are being held at par).

This probably explains why the Greek bank sector has taken a sizeable hit in early trading. If NBG feels the need to raise capital expect others to follow – if they can.
And if you want to know why a Greek debt restructuring is all but inevitable Michael Lewis’ lengthy piece for Vanity Fair tells you all you need to know. ( δυστυχώς…)

 “Democracy destroys itself because it abuses its right to freedom and equality. Because it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress.”


Related Links:

Beware the Greeks, though not just yet – FT Alphaville

Greek debt crisis – apocalypse later – FT Alphaville

Sovereign default – unnecessary, undesirable, and unlikely – FT Alphaville

How to think about a sovereign default – FT Alphaville

This entry was posted by Neil Hume on Wednesday, September 8th, 2010 at 9:30 and is filed under Capital markets, M&A, People.
Tagged with alpha bank, Apostolos Tamvakakis, government bonds, Greece, haircuts, national bank of greece, vanity fair.

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