UPDATE 1-Greece's NBG eyes tapping markets with equity offering

Sat Apr 12, 2014 11:58am EDT

* NBG needs to plug 2.18 bln euro capital shortfall

* Central bank chief encourages prompts NBG to turn to markets (Adds quote, background)

ATHENS, April 12 (Reuters) - Greece's largest lender, National Bank (NBG), is considering tapping international markets with a share offering as part of plans to plug a capital shortfall, a senior executive at the bank told Reuters on Saturday.

NBG's peers Alpha Bank and Piraeus successfully tapped markets last month, as foreign investors begin to show appetite for battered Greek assets on signs that the country is starting to recover from its debt crisis.

"All solutions are being reviewed in the present circumstances, without excluding an equity offering," the banker said, declining to be named.

Alpha and Piraeus raised a combined 2.95 billion euros last month while the third-largest lender, Eurobank, is set for a 2.86 billion euro offering later this month.

The Greek government returned to the bond market on Thursday after a four-year exile, raising 3.0 billion euros with a five-year bond that was snapped up by foreign investors.

A stress test by Greece's central bank last month indicated that NBG, which has a current market value of 9.6 billion euros, needs an extra 2.18 billion euros ($3.03 billion) of capital.

The group had said it would not resort to an equity issue like its peers to plug the gap, but instead focus on selling non-core assets. But on Friday the central bank urged a change of course.

"If it (National) also decided to tap markets, it would meet with great success," Bank of Greece Chief George Provopoulos said.

NBG, about 84 percent owned by Greece's HFSF bank rescue fund, returned to profit last year, helped by its Turkish unit Finansbank, lower funding costs and reduced provisions for bad loans.

"We have a lot of ammunition in our arsenal as options to cover the capital need," the banker said. (Reporting by George Georgiopoulos; Editing by Kevin Liffey)

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