Eurobank €2.86bn Share Issue Set for April 25-29

A man comes out of an Eurobank branch in central AthensGreece’s fourth biggest lender Eurobank said on Good Friday that its 2.86 billion euros share issue will take place between Friday April 25th and Tuesday April 29th.

The issue price per new share will be announced by Thursday April 24th by the bank’s board of directors after they have determined a price range for the offer. The issue price cannot fall beneath the existing shares’ nominal value of 0.30 euros each, which has tumbled from 6.55 euros last May.

The share price will apply to investors participating in both the domestic and international offerings, which will have separate book-building processes, with as much as 90 percent expected to be offered to foreign investors.

Up to 9.54 billion in new shares will be issued and according to reports, the capital hike is expected to be completed by May.

The bank announced in November last year that it would seek a further two billion euros to shore up its capital base ahead of Bank of Greece diagnostic exercise but delays to the disclosure of those stress test results, and the passage through Greece’s parliament of new legislation on bank recapitalization, meant the board stalled its official announcement of a capital raise until April 12.

The new legislation made it possible for the Hellenic Financial Stability Fund (HFSF), the Greek government’s bank recapitalization vehicle that holds 95 percent of Eurobank’s shares, to sell those holdings at a loss and even below the prevailing market price. An offer price of 0.30 euros per share would represent a discount of 80 percent of the what the HFSF paid for the stock last year.

A group of international institutional investors have already pledged to purchase a combined 1.33 billion euros’ worth of Eurobank’s new shares.

The HFSF and the government have been criticized for recapitalizing banks at the taxpayer’s considerable expense, only to then sell the lenders off to foreign investors at firesale prices.

Greek banks have already gotten 41 billion euros ($56.9 billion) from the state, and will need at least another 6.4 billion ($8.88 billion), although the country’s international lenders said it could be as high as 20 billion euros ($27.76 billion).

Greek banks were put into trouble when a previous government imposed 74 percent losses on investors and bondholders.

Two other top banks — Piraeus and Alpha — have respectively raised 1.75 billion and 1.2 billion euros.

The board of National Bank is expected to convene next week to discuss a two-billion-euro capital increase in May, reports said.

Eurobank was unable to attract enough private funds and had to go to the state for a funds injection.

Greek banks are also under the weight of bad loans that have hit as high as 42 percent in some categories because austerity measures imposed by the government on the orders of international lenders have left customers unable to pay what they owe.