NBG Update
Christos Kitsios Christos Kitsios
kitsios@euro2day.gr
follow on
Published: October 30 2015 - 15:45
Banks: They are coming ... flexible capital increases
In the hands of banks, although the PRM will relate to the entire amount, or 50%. The decline of DG Comp, the Decree and the heavy atmosphere among foreign investors. The pile-ups on the issue of mandatory conversion of senior bonds.
inShare
The retreat of the Competition Directorate against the initial requirement for banks to proceed with capital increases for all of their capital needs (AQR, base and adverse scenario) confirm government sources, a development that paves the way for a more flexible recapitalization formula.
As revealed in the morning Euro2day.gr, representatives of DG Comp and the institutions have accepted the arguments submitted by foreign investment banks and funds for the difficulties that would be created to encourage private participation to the decision regarding the share capital increase in total capital needs.
After the above development, it opens the way according to government sources for a more flexible architecture recapitalization, under which the banks will be able to cover either the total or 50% of their capital needs .
The debate on the details of the new formula is open, but is expected to readily completed so that the decision Cabinet to be published before market opening on Monday to move immediately and express procedures the capital increases, combined with the end round of presentations abroad.
The uncertainty caused by the delay in determining the basic mechanism of the recapitalization triggers strong pressure on banking stocks, giving a taste of what will happen if the decision has not come out until next Monday.
The restatement of the formula for capital increases is central to the architecture of the entire project of recapitalization. "If the frame separates the capital needs they aim to satisfy individuals of what has to cover the FSF, the whole structure is changing," notes executive foreign investment bank.
Private investors will have better visibility, the managements of banks will evade responsibility for activating the mandatory conversion of senior bonds to shares will be approximately known from the beginning how much state aid will be given to common voting shares and what with under contingent convertible bonds (CoCos).
The messages from abroad and funds interested in participating in private placements by the book building process was not at all encouraging in recent days, following the decision of DG Comp impose PRM for total capital needs.
Investor interest has fallen sharply because of high capital requirements, which can hardly be entirely covered by the private and the "backdoor" which opened to get much more common shares the government than CoCos. Furthermore, the former shareholders, some of which constitute the hard core of the investors concerned for participation in the Rights Issue, the previous formula would suffer significant dilution rate.
The climate began to change last night because of information on acceptance of the arguments of the Greek side. This helped and the fact that the Single Supervisory Mechanism (SSM) began to provide information on the methodology followed in the adverse scenario and is expected to provide even more information along with the announcement of the results of the overall evaluation.
Banks need information on the methodology of the adverse scenario, in order to inform in turn investors. "It is possible to try to convince an investor to put money to cover and by the adverse scenario without knowing the basic parameters and assumptions on which the capital shortfall resulting" stresses the Euro2day.gr banker involved in presentations .
Karabola change and conversion of the senior
The draft law was submitted today provides for the mandatory conversion of high-grade bonds (senior bonds) to shares if the FSF put even a penny to cover the adverse scenario, or if a bank after the announcement of the capital shortfall to the base scenario found with negative equity.
The holder of the senior bond obligated to convert bonds into shares if a bank does not cover all the capital needs following the conversion of the junior titles before putting money FSF under the floating even threat, the conversion be done at a discount compared to the nominal value.
The restatement of the provision for capital increases will probably lead to changes and compulsory conversion process of senior bonds into shares.
If set in advance the amount of capital needs to cover individuals and the amount that will cover the FSF, the activation of compulsory conversion of senior bonds will not be borne by the Board banks, in the case of course that the PRM is successful, but the resolution authority. The conversion will not be activated before giving State aid
Christos Kitsios Christos Kitsios
kitsios@euro2day.gr
follow on
Published: October 30 2015 - 15:45
Banks: They are coming ... flexible capital increases
In the hands of banks, although the PRM will relate to the entire amount, or 50%. The decline of DG Comp, the Decree and the heavy atmosphere among foreign investors. The pile-ups on the issue of mandatory conversion of senior bonds.
inShare
The retreat of the Competition Directorate against the initial requirement for banks to proceed with capital increases for all of their capital needs (AQR, base and adverse scenario) confirm government sources, a development that paves the way for a more flexible recapitalization formula.
As revealed in the morning Euro2day.gr, representatives of DG Comp and the institutions have accepted the arguments submitted by foreign investment banks and funds for the difficulties that would be created to encourage private participation to the decision regarding the share capital increase in total capital needs.
After the above development, it opens the way according to government sources for a more flexible architecture recapitalization, under which the banks will be able to cover either the total or 50% of their capital needs .
The debate on the details of the new formula is open, but is expected to readily completed so that the decision Cabinet to be published before market opening on Monday to move immediately and express procedures the capital increases, combined with the end round of presentations abroad.
The uncertainty caused by the delay in determining the basic mechanism of the recapitalization triggers strong pressure on banking stocks, giving a taste of what will happen if the decision has not come out until next Monday.
The restatement of the formula for capital increases is central to the architecture of the entire project of recapitalization. "If the frame separates the capital needs they aim to satisfy individuals of what has to cover the FSF, the whole structure is changing," notes executive foreign investment bank.
Private investors will have better visibility, the managements of banks will evade responsibility for activating the mandatory conversion of senior bonds to shares will be approximately known from the beginning how much state aid will be given to common voting shares and what with under contingent convertible bonds (CoCos).
The messages from abroad and funds interested in participating in private placements by the book building process was not at all encouraging in recent days, following the decision of DG Comp impose PRM for total capital needs.
Investor interest has fallen sharply because of high capital requirements, which can hardly be entirely covered by the private and the "backdoor" which opened to get much more common shares the government than CoCos. Furthermore, the former shareholders, some of which constitute the hard core of the investors concerned for participation in the Rights Issue, the previous formula would suffer significant dilution rate.
The climate began to change last night because of information on acceptance of the arguments of the Greek side. This helped and the fact that the Single Supervisory Mechanism (SSM) began to provide information on the methodology followed in the adverse scenario and is expected to provide even more information along with the announcement of the results of the overall evaluation.
Banks need information on the methodology of the adverse scenario, in order to inform in turn investors. "It is possible to try to convince an investor to put money to cover and by the adverse scenario without knowing the basic parameters and assumptions on which the capital shortfall resulting" stresses the Euro2day.gr banker involved in presentations .
Karabola change and conversion of the senior
The draft law was submitted today provides for the mandatory conversion of high-grade bonds (senior bonds) to shares if the FSF put even a penny to cover the adverse scenario, or if a bank after the announcement of the capital shortfall to the base scenario found with negative equity.
The holder of the senior bond obligated to convert bonds into shares if a bank does not cover all the capital needs following the conversion of the junior titles before putting money FSF under the floating even threat, the conversion be done at a discount compared to the nominal value.
The restatement of the provision for capital increases will probably lead to changes and compulsory conversion process of senior bonds into shares.
If set in advance the amount of capital needs to cover individuals and the amount that will cover the FSF, the activation of compulsory conversion of senior bonds will not be borne by the Board banks, in the case of course that the PRM is successful, but the resolution authority. The conversion will not be activated before giving State aid
