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Greece's Piraeus Bank Is Said to Face Capital-Raise Deadline - Bloomberg

10/4/18, 11(01 PM

Markets

Greece's Piraeus Bank Is Said to Face Capital-Raise Deadline

September 27, 2018, 11:00 PM EDT Updated on September 28, 2018, 5:23 AM EDT

Lender has to raise funds via Tier 2 debt sale this year11:00 PM EDT Updated on September 28, 2018, 5:23 AM EDT Unfavorable market conditions make it

Unfavorable market conditions make it harder to issue debtEDT Lender has to raise funds via Tier 2 debt sale this year LISTEN TO ARTICLE

LISTEN TO ARTICLE

1:50conditions make it harder to issue debt LISTEN TO ARTICLE In this article   TPEIR PIRAEUS

ASE Athex Composite Share Pr 676.36 EUR Greece’s second-biggest lender has been told by the

Greece’s second-biggest lender has been told by the European Central Bank

to increase its capital this year, a task complicated by the country’s limited

access to bond markets.

Piraeus Bank must raise about 500 million euros ($584 million) by selling

tier 2 bonds under a plan agreed with the ECB’s Single Supervisory

Mechanism, two people with knowledge of the matter said. They asked not

to be identi ed because the matter is private. Spokesmen for Piraeus, the

SSM and the Bank of Greece declined to comment.

the SSM and the Bank of Greece declined to comment. Supervisors haven’t yet taken a decision

Supervisors haven’t yet taken a decision on how to proceed if Piraeus

doesn’t raise the funds this year, the two people said. The company may be

given some exibility in terms of the timing, given the unfavorable

conditions in the bond market, one of them said.

Greek bank stocks have, on average, lost about 34 percent of their value this

year as the industry struggles to tackle a mountain of bad loans stemming

from the country’s sovereign debt crisis. That’s almost three times as much

as the benchmark Athens Stock Exchange General Index.

BadBad DebtDebt

Greek banks are struggling under a pile of non-performing exposures

Greece's Piraeus Bank Is Said to Face Capital-Raise Deadline - Bloomberg

NPE Ratio as a share of total loans

Piraeus Bank Alpha Bank National Bank of Greece Eurobank Bank of Cyprus Hellenic Bank Monte Paschi Unicredit

Eurobank Bank of Cyprus Hellenic Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1

54.7%

Bank of Cyprus Hellenic Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1 33.0
Bank of Cyprus Hellenic Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1 33.0

42.1

51.9

Cyprus Hellenic Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1 33.0 Source: Company

40.7

Hellenic Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1 33.0 Source: Company filings;

38.0

Bank Monte Paschi Unicredit 54.7% 42.1 51.9 40.7 38.0 8.7 13.1 33.0 Source: Company filings; data
8.7
8.7

13.1

33.0

Source: Company filings; data as of end-June

All Greek lenders are rated as junk because Greece’s sovereign debt is also

below investment grade. Greek sovereign-bond yields, acting as a

benchmark for domestic companies and lenders, have remained high after

the country’s exit from a bailout program, meaning that high borrowing

costs also a ect businesses.

The demand to raise funds via subordinated debt sales is part of the plan

agreed with supervisors to boost Piraeus’s capital ratio. The lender has also

pledged to clean up its balance sheet via sales of bad loans.

It aims to sell a portfolio of shipping loans worth around 500 million euros,

called Nemo, in the rst half of 2019, two separate o cials said. The bank

hired nancial adviser Houlihan Lokey Inc. to help with the sale, the people

said. An o cial for Houlihan declined to comment on the hiring.

10/4/18, 11(01 PM

— With assistance by Antonio Vanuzzo, and Luca Casiraghi

(Updates with loan-portfolio sale details in last paragraph.)

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