(Updates with shareholders approval, executive comment)
ATHENS, April 30 Greece's fourth-biggest lender
Eurobank won approval on Tuesday from its main
shareholder National Bank for a capital injection that
makes it the first major Greek bank to fall under state control
as a result of the debt crisis.
Greece's four major banks including Eurobank need 27.5
billion euros in fresh funds to restore their solvency ratios to
levels required by the country's central bank after incurring
losses from a sovereign debt writedowns and impaired loans.
Another of the four, National Bank, agreed to its own 84.3
percent holding in Eurobank being diluted to the low single
digits by an issue of shares to the government's Hellenic
Financial Stability Fund (HFSF) in return for 5.84 billion euros
The shares will be issued at 1.541 euros each after a
10-for-1 reverse split, Eurobank's Chief Financial Officer Paula
Hatzisotiriou told shareholders.
Private shareholders still have stakes in each of the four
banks but their value is set to dwindle as injections of capital
formalise the official life support on which they rely to
Eurobank executives said the bank hoped to return to private
hands at a later stage and the country's bailout program
requires the bank fund to sell off its stake after three years.
"Our return to the private sector is the bank's main goal,
to return where we belong as soon as possible," Eurobank's
Chairman Efthymios Christodoulou told shareholders.
Eurobank dropped efforts to plug part of its capital hole by
tapping shareholders and private investors after plans to
integrate with parent NBG into a single banking group were
suspended following objections from Greece's international
Executives said uncertainty on whether the plan to merge
with parent NBG would proceed had hurt its investment case
during efforts to get commitments by private investors to take
part in the capital boost via a rights offering.
Eurobank and NBG are still waiting for the bank rescue fund
to make a final decision on whether their integration should
"If authorities decide against the merger, Eurobank will
submit a business plan to attract private strategic and
institutional investors from Greece and abroad," CEO Nick
Nanopoulos said, adding the bank could become a "fourth pillar"
for further restructuring in the banking sector.
Rivals Piraeus and Alpha Bank are
expected to meet a 10-percent required private sector
participation in their recapitalisation to retain management
NBG has also said the 10 percent target is attainable and
that it is aiming to get private investors to subscribe to 12
percent of its share offering.
(Reporting by George Georgiopoulos, editing by Deepa Babington
and Patrick Graham)