The National Bank of Greece has raised collects private funds of at least 1.1 billion euros, ($1.47 billion) increasing its capital without issuing contingent convertible bonds (CoCos).
As newmoney.gr reports, the National Bank of Greece approached its target to cover 12% of the share capital increase by private funds.
The administration weights the amount of funds that the bank will raise, in order to achieve the best possible result. That is, not to issue CoCos, which have a high cost and simultaneously involve the dilution risk for the rest shareholders, but also the warrants will keep the value and the expectation for the bank’s shareholders.
That came as reports showed that Greece’s bank rescue fund will have as much as 7 billion euros ($9.36 billion) left over after country’s four big banks are recapitalized, the central bank governor said. Greece’s four biggest banks need 27.5 billion euros ($36.77 billion) to plug capital holes after losses on government debt writedowns and bad loans following the financial crisis.
The money will mostly come from the Hellenic Financial Stability Fund (HFSF). With their solvency restored, the aim is for banks to regain access to capital markets and help fund the economy out of its deep six-year slump but there’s no guarantee that they will lend it out or just keep it.
The HFSF is funded with 50 billion euros ($66.8 billion) from the country’s bailouts being put up by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) bailout to cover the costs of the capital injections and winding down smaller banks that authorities have deemed non-viable.
“From the package of 50 billion, we expect there will be a sum left over as a cushion that may reach 7 billion, between 6 to 7 billion euros,” Bank of Greece Governor Giorgos Provopoulos told the Greek Parliament’s Economic Affairs Committee.
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