Athens, November 5, 2015/Independent Balkan News Agency
By Spiros Sideris
The extraordinary general meeting of shareholders on November 15, 2015, to approve the capital injection of up to EUR 4.9 bn decided the Board of Piraeus Bank.
Meanwhile, the bank proceeded with the opening of the book for the share capital increase. According to information, the bank aims to collect at least EUR 1.6 bn and is expected to remain open until Friday.
In particular, the general meeting will be convened in order to approve:
– The share capital increase by issuing new shares without preemptive right of the existing shareholders, which will be covered by paying cash to private investors, the exercise for the management of deficit, already underway since October 15, 2015 and the issue of new common nominal shares and contingent convertible bonds to the Financial Stability Fund (FSF) and
– the reduction of the number of common shares of the bank (reverse split), which is not expected to be less than 100 existing ordinary shares for each new common share. The board of Piraeus Bank plans to raise, through the capital strengthening, a total capital of up to EUR 4.933 bn. Through the capital increase, the bank seeks to meet the capital needs of the AQR and stress tests under the “baseline scenario” minus the funds created by the exercise for the management of deficit of up to EUR 600 mln, minus the capital of any other deficit mitigation actions. Taking into account the interest of investors, the bank may increase the amount of the capital increase. The minimum price per common share in the capital increase is EUR 0.30, ie its nominal value.
The capital increase is expected to be implemented through the opening of the book to institutional and other selected investors. The total amount that the bank will seek to collect through the book building process and the FSF, will be adjusted respectively by the Governing Board, taking into account the outcome of the exercise for the management of deficit.
The Deutsche Bank AG London Branch and UBS Limited are acting as responsible banks for this process, as international coordinators and Trustees (Joint Process Banks, Joint Global Coordinators and Joint Bookrunners), Credit Suisse Securities (Europe) Limited is acting as international coordinator and co-manager (Joint Global Coordinator and Joint Bookrunner) and Euroxx Securities and Mediobanca-Banca di Credito Finanziario SpA are acting as co-managers (Joint-Bookrunners) for the capital increase.
Results of the Global Evaluation performed by the European Bank
The European Central Bank published on October 31, 2015 the results of the Comprehensive Evaluation for Greek systemic banks. The Comprehensive Assessment included: (i) Assessment of asset quality («Asset Quality Review» or «AQR») and (ii) exercise stress testing («Stress Test» or «ST») under the assumptions of a “base” and an “adverse” scenario. The total capital needs of Piraeus Bank were determined to EUR 4.933 bn, comprised of a capital deficit of EUR 2.213 bn from the AQR and ST under the “baseline” scenario and an additional capital shortfall of EUR 2.720 bn. From the ST under the “adverse” scenario (all amounts do not include mitigation actions of the capital shortfall is expected to be approved by the European Central Bank and to partly reduce these needs).
The purpose of the recapitalisation
Besides meeting the required capital needs, with the Capital Strengthening Piraeus Bank aims to strengthen its capital base, ranking thus among the top European banks in terms of the common share class 1 (CET-1) capital ratio and an increase of the participation of individuals in the share capital of the bank. Also, to further improve the image of the bank to domestic depositors, thereby contributing to faster normalization of the financial base of the bank and the replacement of liquidity from the Special Support Mechanism (ELA) with deposits and contribute to the recovery of the Greek economy, utilising its leadership market position and growth opportunities to provide lending to healthy borrowers.