MacroPolis

Two of the four systemic Greek banks, Alpha and Eurobank, have announced the completion of their bookbuilding process.

Alpha said on Thursday it successfully raised a total of 2.56 billion euros from the bookbuilding combined with the outcome of the Liability Management Exercise (LME), which took the form of voluntary bond swap offer to its bondholders.

Since the LME resulted in a capital strengthening of 1.01 billion euros, the equity raising from the bookbuilding stood at 1.55 billion.

Overall, the equity raising of 2.56 billion euros fully covered than bank’s capital needs under the adverse stress test scenario. They initially stood at 2.74 billion but were reduced to 2.56 billion after the ECB’s Single Supervisory Mechanism (SSM) approved capital mitigating actions totaling 180 million.

Following these developments, Alpha will not need any state aid.

At the same time, Alpha announced the offer price for both transactions, which was set by its BoD at 0.04 euros per share. This corresponds to a discount of 34.4 percent on Wednesday’s closing price of 0.061 euros.

Following the capital increase, the Hellenic Financial Stability Fund’s (HFSF) participation in the bank’s share capital would be reduced to around 11 percent from its current level of 66.24 percent.

Eurobank

Eurobank announced on Wednesday evening the completion of its bookbuilding process conducted via a non-preemptive equity offering to international qualified institutional investors.

The bank said that demand from the equity offering and preliminary results of its LME point to an amount higher than the 2.04 billion euros. This was set as the bank’s total capital needs excluding the 83 million euros in capital mitigating actions approved by the SSM.

This means that Eurobank will also avoid needing any state aid.

The allocation of new shares between the institutional offering and the LME will be announced at a later stage, the bank said. In addition, Alpha will also conduct a reverse split (1:15) since its current price stands well below the minimum price of 0.30 euros allowed by the law.

Eurobank also announced the offer price for both transactions set by its BoD at 0.01 euros per share. The offer price corresponds to a discount of 52.4 percent on Wednesday’s closing price of 0.021 euros.

As a result of the capital increase, the HFSF participation in the bank’s share capital would be almost wiped out, falling to 2.4 percent from its current level of 35.41 percent.

According to a provisional timetable, new Eurobank shares will begin trading on December 1. In addition, a temporary suspension in Eurobank trading is scheduled between November 26 and 30 to accommodate the announced reverse split (1:100).

The sharp drop in HFSF participation in both banks was expected since the amount of equity raising was 3.3 times Alpha’s current market cap of 779 million euros and 6.6 times Eurobank’s respective figure of 309 million.

In addition, the marked discount of the offer price compared to the market price in both transactions is a common practice in capital increases, particularly those conducted via a bookbuilding process, where the offer price is actually determined by the demand from investors and not by the bank.

Greek bank shares have nosedived by 46.1 percent since the announcement of their capital needs on October 31, amid stock overhang and huge dilution for current shareholders, while have plunged 79.4 percent after the imposition of capital controls.

The market cap of the four systemic Greek banks currently stands at 2.59 billion, with NBG at 1.33 billion, Alpha at 779 million, Eurobank at 309 million and Piraeus at just 177 million.

*Manos is the head analyst at MacroPolis. You can follow him on Twitter: @ManosGiakoumis