The “troika” of lenders at the EU, the ECB, and the IMF are back in Greece, and the Greek stock market is up 5.4 per cent today.
On Sunday, the troika and the Greek government froze a plan to merge Greece’s two largest banks, National Bank of Greece and Eurobank.
Now, the banks have to find another way to raise money to recapitalize themselves or face being nationalized.
That sent shares of both banks tumbling 30 per cent on Monday. However, by the end of the trading session, they had already erased their losses and posted big gains. Eurobank closed up 20 per cent.
Today, Eurobank is up another 30 per cent, and National Bank of Greece is trading higher as well.
However, the whole Greek stock market is getting a big lift.
The boards of both banks plan to convene today to discuss a last-ditch attempt to avoid nationalization.
Greek newspaper Kathimerini reports:
Sources from National Bank said the country’s biggest lender will make a last-gasp effort to find funds, saying it is in constant contact with Greek and foreign investors. National’s requirements amount to 9.76 billion euros and those of Eurobank to 5.84 billion.
Eurobank believes it has an outside chance of attaining the goal of finding 10 per cent of its fund requirements from the private sector, given that it has not tried to tap the market recently due to the acquisition of 84.3 per cent of its shares by National, which has already been completed.
According to sources, Eurobank has already presented a plan as to how it will attract strategic investors: It intends to issue convertible bonds (CoCos) amounting to 1 billion euros, while only the remaining 4.8 billion will be covered via a share capital increase, which means that private investors will have to cover just 480 million euros.
The Kathimerini article notes that the banks face tremendous difficulty raising funds in the open market.
For now, though, given the share action today, investors seem relatively optimistic about their prospects.