National Bank of Greece (ADR): What To Expect Fr

National Bank of Greece (ADR): What To Expect From Bailout Review
Published by Talfryn Taylor on October 26, 2015 at 3:29 pm EST

NBG

img National Bank of Greece (ADR): What To Expect From Bailout Review
Results from the Bailout Review will determine Greece’s future in the Eurozone

With the bailout review in progress, many Greeks fear failure to meet economic targets on the outlined schedule will hinder growth. It will also delay the release of bailout funds to the horror of many.

International lenders arrived in Athens last week to start the crucial bailout review, which will determine the future of Greek banks. The review aims to ascertain how well the demands of international lenders have been incorporated, and what steps banks have taken to revive stable conditions.

The score Greece secures in this review will determine the amount of funds it will be able to extract from this bailout. A significant portion of these funds will be utilized in reviving the banking sector of the country.

The European Central Bank (ECB) is also reviewing the position of Greek banks. Many expect that banks will ultimately move from bailout funds to aid, as private investors and market funds won’t be enough to meet Greek banks’ capital shortages.

A large chunk of the Greek bank market cap was lost during the financial crisis. As for the National Bank of Greece (NBG), it has lost about 95% of the market cap in a span of five years. Same is the case with other big banks in Greece, namely Alpha Bank, Eurobank and Piraeus Bank, which have lost a big chunk of their cap during the crisis.

The Single supervisory mechanism (SSM), a part of ECB, is going through the financials of the aforementioned banks. It is expected that SSM will announce the results of this review this month.

The Greek government has to take further measures to revamp the economy to meet targets set by lenders. Greece is gradually moving towards a positive economic environment, but more concrete measures are required to put it in a positive direction.

Many fear that capital control measures for Greek banks (to save them from being drained out) are harming the economy. But last Wednesday, the Greek finance minister made it clear that this was not the case.
National Bank of Greece (NBG)

According to Reuters, three of the investment firms (Bank Julius Baer, Dynatrend Fund and LC Equity Fund) in Greece violated short-selling rules on NBG stock last week on Thursday. They were fined $1.14 million by Greece's security market regulator. Due to the pending recapitalization of NBG, a ban was imposed on short-selling of its stock till November 9.

The non-performing loans of the bank were recorded at 24.3% in the previous quarter, but this quarter, the number rose to 24.6%. They rose by 133 million euros compared to last quarter. The net interest income for this quarter dropped 3.7% quarter-over-quarter (QoQ), and the pre-provision profit rose 18% QoQ.

On October 23, 2015, the company’s stock closed at $0.88 (a decline of 5.69%). The stock was able to maintain a range of $0.84 - $0.91 and reported an average trading volume of 7.53 million.

Its shares surged 9.26% in the past week, and rose 34.31% in the last four weeks. The significant growth observed during this period can be attributed to major positive decisions taken by the bank. The bank plans to sell its Turkish subsidiary, Finansbank A.S, to boost its capital. Experts believe the Turkish bank will be able attract funds close to its book value of $3.6 billion, which will greatly reduce NBG’s dependence on bailout funds.

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