April 11, 2013 / 7:36 PM / in 5 years

Greece's Eurobank plans to raise 1.7 bln euros from CoCo bonds

ATHENS, April 11 (Reuters) - Greek lender Eurobank will seek shareholder approval for a rights offering of up to 5.84 billion euros and an issue of contingent convertible bonds (CoCos) of up to 1.7 billion euros as part of its recapitalisation, it said on Thursday.

Greece’s four major banks 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 writedown and impaired loans.

Eurobank’s capital needs have been set by the Bank of Greece at 5.839 billion euros.

Most of the funds will be provided by a state bank support fund, the Hellenic Financial Stability Fund (HFSF), in exchange for new shares or contingent convertible bonds.

Under the terms of the recapitalisation plan agreed with the country’s international lenders, at least 10 percent of banks’ new common equity must be raised from the private sector to stay privately run.

CoCos will be exclusively taken up by the HFSF rescue fund and Greek banks plan to resort to them if they fail to get 10 percent of their rights offering from private investors.

The country’s largest lender National bank bought 84.3 percent of Eurobank via a share swap in February. The integration of the two lenders was suspended this week after they admitted they were unlikely to raise enough cash from private investors and Greece’s international lenders raised doubts over the deal.

Eurobank’s shareholders are due to meet on April 30 to approve the bank’s recapitalisation scheme.

Greece’s international lenders have set aside 50 billion euros from the country’s bailout package to recapitalise viable banks and cover the costs of winding down others that are deemed non-viable.

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