June 29, 2012 / 12:26 PM / 5 years ago

Greek bank recap must entice investors - Alpha Bank

ATHENS, June 29 (Reuters) - The Greek government needs to offer incentives for private investors to take part in a planned recapitalisation of the country’s banks to avoid state control of the sector, the head of Alpha Bank said on Friday .

Funds will come from the country’s second, 130 billion-euro ($162 billion) EU/IMF rescue package agreed this year but at least 10 percent of the capital injection needs to be put up by private shareholders.

“The highest possible participation of private capital in the recapitalisation process is a necessary element so as to restore the private character of banks’ shareholder structure going forward,” Chairman Yannis Costopoulos told the bank’s annual meeting of shareholders.

The incentives must be attractive enough to sway investors who have already suffered deep losses on their holdings and been starved of dividends, he said.

With the Athens market’s banking sector index down more than 77 percent in the last 12 months alone the scale of the recapitalisation, at a cost of as much as 50 billion euros ($62 billion) is several times the current market value of the banks.

The country’s top four banks -- National, Eurobank , Alpha and Piraeus -- have already been allocated a total of 18 billion euros in new capital after making big losses on their sovereign debt holdings in Greece’s historic debt restructuring in March.

Meanwhile the chief executive of Eurobank, Greece’s second largest lender, said at its annual meeting on Friday that it would seek 50 million euros in compensation from Alpha Bank for scuppering a planned merger between the two.

Alpha pulled the plug on the deal in March, backing away from what would have been Greece’s largest bank merger in decades due to the country’s debt restructuring. ($1=0.8047 euros) (Editing by Greg Mahlich)

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