Greek lender Piraeus Bank is reportedly planning a capital raise in March this year, which will lower the state’s holding in the bank.
The goal is to raise up to €1bn ($1.2bn), reported Bloomberg citing people familiar with the issue.
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At present, the Hellenic Financial Stability Fund (HFSF) – which is a Greek special purpose vehicle created to stabilise the country’s banking industry – owns 61.3% of the share capital of Piraeus Bank.
“It’s not decided yet which kind of issue there will be — if this will be a full market operation or a rights issue,” HFSF CEO Martin Czurda was quoted as saying by Bloomberg.
The fund plans to reduce its interest below the 30% threshold, however, this is subject to the demand in the market, Czurda noted. The ultimate aim is to stabilise the banking sector, which has been weighed down by rising debt loads.
The bank intends to tap the market by the first quarter of this year after issuing a prospectus this month.
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By GlobalDataUS investment bank Goldman Sachs Group along with Switzerland’s UBS are the global coordinators managing the capital raise, while HFSF is advised by American investment bank Morgan Stanley.
Czurda further stated that the Greek government is working on amending the rule governing HFSF.
Among the planned changes include participation of the vehicle in share capital increases by leveraging its own resources. When required, this would help the fund backstop the share sale.
Czurda also said that the aim is to bring the non-performing exposure ratio of all four banks below 10% by this year-end. However, he cited business models of the country’s lenders as a key impediment.
Czurda was quoted as saying: “We’re very critical with the business models and we’re challenging the banks to become really realistic. They have to transform the banks.
“If things go well and the markets are lets say only normal, I would expect that Greek banks could function normally in one to two years time.”
Other moves
In recent years, Piraeus Bank has offloaded several of its subsidiaries.
In June 2019, the bank sold its Bulgarian business to Bulgaria’s Postbank, a subsidiary of Greek Eurobank Ergasias.
In March 2019, Piraeus Bank divested its Albanian subsidiary Tirana Bank to Balfin Group and Komercijalna Banka.
The Greek lender also sold its entire stake in its Romanian banking unit to American investment firm J.C. Flowers in 2018. Earlier, it sold its Egypt subsidiary to Al Ahli Bank of Kuwait.
