ATHENS: Greece's Piraeus bank announced plans on Tuesday to issue new shares to raise up to 4.9 billion euros ($5.37 billion) to plug a capital shortfall found by ECB health checks.
Piraeus will also issue contingent convertible securities of up to 2.04 billion euros, it said in a bourse filing, and called an extraordinary shareholders meeting on Nov. 15 to approve the plan. A health check by the ECB last weekend showed the four main Greek banks had a 4.4 billion euro capital shortfall under a "baseline" scenario of normal economic conditions prevailing in the country, and a 14.4 billion euro gap under an adverse scenario.
Piraeus has a capital shortfall of 4.93 billion euros under the adverse scenario of its stress test.
If Greek banks cover the baseline 4.4 billion gap from private investors, the state bank bailout fund HFSF will supply the remainder, up to the 14.4 billion defined in adverse conditions, by buying a mix of new shares and contingent convertible bonds (CoCos), which convert to equity if capital buffers fall below a certain level.
HFSF's state aid will be pumped in based on the 75-25 percent ratio of CoCos and new shares.
Alpha Bank will also hold a shareholders meeting on Nov. 14 to secure approval for a share offer and the issue of CoCos. The bank had the smallest capital shortfall among Greece's four big banks under the ECB's baseline scenario at 263 million euros.
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