ATHENS Shares in Greek lenders National Bank (NBGr.AT) and its subsidiary Eurobank EFGr.AT plunged on Monday as investors dumped shares on dilution fears as both face nationalization.
Both shares fell 30 percent at Monday's open, hitting their daily volatility limit and pushing the Athens bourse's banking index .FTATBNK 16.7 percent lower.
Together, the two banks need 15.6 billion euros ($20.31 billion) in fresh capital to shore up their solvency ratios to levels set by the central bank after incurring losses from a sovereign debt writedown and impaired loans.
The two banks have told the central bank they are unlikely to raise a required 10 percent of their capital need via share offerings from the market, a finance ministry official said on Sunday, which means they will fall under the full control of a state bank support fund.
"Their admission that it is unlikely they will raise the required 10 percent from private investors is quite negative, their shareholders may become owners of a nationalized bank," said Maria Kanellopoulou, an analyst at Euroxx Securities.
Under a recapitalization scheme agreed with Greece's international lenders, the Hellenic Financial stability Fund (HFSF), a state bank support fund, will provide most of the capital banks need in exchange for new shares and contingent convertible bonds.
To stay private, banks must ensure that at least 10 percent of their share offerings is taken up by private investors.
"The market's reaction reflects ownership dilution worries and uncertainty on what the future holds for both banks," said Theodore Krintas, head of wealth management at Attica Bank.
Also weighing on market sentiment was a suspension on their plans to integrate and form the country's biggest banking group.
($1 = 0.7679 euros)
(Reporting by George Georgiopoulos)