National Bank of Greece Seeks to Raise 2.8 Billion Euros（8Sep2010)

National Bank of Greece SA, the nation’s largest lender, plans to raise 2.8 billion euros ($3.6 billion) to bolster capital and its ability to expand in Greece and the region.

The Athens-based lender will offer existing shareholders 121.4 million new shares at 5.2 euros apiece to raise 631 million euros. The lender will also sell convertible bonds to raise a further 1.18 billion euros. That sale will be completed by the end of October, according to an e-mailed statement today.

The bank will also offer a minority stake in its Turkish unit, Finansbank AS, while keeping a holding of at least 75 percent, the statement said. Tier 1 capital, a measure of financial strength, will rise to 14.6 percent from 10.7 percent at the end of June.

National Bank “is proactively fortifying its balance sheet as a prudent response to the macro-economic realities in our core market and enhances our strategic options,” Chief Executive Officer Apostolos Tamvakakis said in the statement. “Our capital plan is a conservative and proactive approach to risk and capital management.”

Greek banks face soaring loan losses and a potential contraction in lending as the government implements austerity measures following the country’s 110 billion-euro bailout in May. National Bank is relying on markets outside Greece, including its Finansbank unit in Turkey, to bolster profit.

Worst Performer

National Bank slumped 7.1 percent to 10.40 euros in Athens trading today, making it the worst performer of the 54 European financial stocks on the Bloomberg Europe Banks and Financial Services Index. The stock has declined 42 percent so far this year, paring the lender’s market value to about 6.3 billion euros, as concern mounts that it may have to write down its holdings of Greek bonds.

The lender owns about 95 percent of Finansbank, according to data compiled by Bloomberg. The stock and convertible offerings are fully underwritten by a group of banks including Credit Suisse, Deutsche Bank, Goldman Sachs International, Morgan Stanley and TT Hellenic Postbank.

National Bank posted a 79 percent drop in first-half profit, hurt by a decline in Greek bond prices and a windfall government levy. The bank had a loss of 159 million euros in Greece and a 251 million-euro profit in Turkey.

A successful completion of the plan would allow the bank to repay 350 million euros of preference shares issued by the Greek government under a liquidity plan, which may allow the bank to resume paying dividends. The plan is to be approved at a board meeting on Sept. 10.