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UPDATE 1-Greece's Eurobank wants to plug capital shortfall from private investors only
November 3, 2015 / 5:56 PM / 2 years ago

UPDATE 1-Greece's Eurobank wants to plug capital shortfall from private investors only

* Eurobank plans 2.1 bln eur share offering after ECB stress test

* Says shareholders will meet on Nov. 16 to approve plan

* Eurobank swings to profit in Q3 (Add Q3 results, shareholders’ meeting)

ATHENS, Nov 3 (Reuters) - Greece’s third largest lender Eurobank announced on Tuesday it planned to avoid receiving state aid and would press ahead with a share offer plan to private investors to plug a capital shortfall shown in ECB stress tests.

The ECB’s health check showed that Eurobank, which is 35.4 percent owned by the country’s HFSF bank rescue fund, has a capital shortfall of 2.12 billion euros ($2.32 billion) under the adverse scenario of the stress test, the lowest among the country’s four systemic banks.

The extraordinary shareholders’ meeting will be held on Nov. 16, the bank said. The new shares will be offered to institutional and other investors via a private placement through a book-building process expected to start next week and be completed by the end of the month.

Chief Executive Officer Fokion Karavias told analysts that the bank wants the amount to be covered by equity investors and an ongoing bond buyback offer “so that it receives zero state aid, avoiding the overhang of CoCos (contingent convertible bonds) and remaining the most private bank in Greece with an even lower HFSF shareholding participation”.

Athens wants to conclude the first review of its international bailout quickly to qualify for fresh aid. It has said it wants to recapitalise its banks by the end of the year and avoid a depositors’ bail-in, or a raid on deposits.

The government has said that state aid to Greek banks will be provided via a combination of new shares and contingent convertible bonds (CoCos) issued by banks.

Eurobank on Tuesday posted a net profit of 405.6 million euros for the third quarter compared with a loss of 1.32 billion euros in the second quarter, helped by lower bad debt provisions.

Provisions for non-performing loans came in at 256 million euros in the third quarter, a 86 percent drop compared to the previous quarter, the bank said.

Non-performing loans - which are more than 90 days past due - accounted for 35 percent of the bank’s loan portfolio, up from 34.3 percent in the previous three months. ($1 = 0.9124 euros) (Reporting by Lefteris Papadimas and Angeliki Koutantou; editing by Adrian Croft)

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