New sign of normalization of the financial situation in Greece : the first bank in the country, and the oldest, the National Bank of Greece (NBG) is preparing its return to the bond market. The largest commercial bank in greece, with 6 million customers and a market share of 25% in retail banking, started Wednesday a tour with institutional investors in Europe, a “road show” conducted by a handful of large banks (Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, HSBC, Natwest Markets, and UBS), in order to present its project for issue of a loan of size “benchmark” (about 500 million euros), a maturity of three years.
It is of covered bonds (covered bonds), that is to say backed by a pool of assets, generally mortgages or public sector, which are therefore rated by the rating agencies.
Last July, the Greek State has issued its first bond loan for three years, for an amount of € 3 billion, which had met with great success among investors, the search for higher returns in a low interest rate environment.
Repayment of the aid
During a presentation to credit analysts and bond investors last July, the bank’s NBG, which presents itself as “the bank of reference in Greece for more than 170 years,” was quoted as one of its strategic objectives “the return to an activity modest in the primary markets of capital”.
It is also the first Greek bank to have repaid the State aid, including the CoCos (contingent convertible bonds mandatory conversion”) for more than 2 billion euros in December last year. Its use of emergency liquidity from the ECB (ELA) has been reduced to 2.6 billion euros at the end of August (compared to 17.6 billion in June 2015) and the overall eu funding to € 6.8 billion (divided by two to seven months), two years after the international rescue plan of the Greek banking sector to € 86 billion in 2015.
“NBG is the bank with the lowest ratio of exposures non-performing [receivables past due or likely to be uncollectible, editor’s note] in Greece, coverage in the greatest liquidity and a strong track record in the reduction of bad loans”, asserted the head of the bank of athens, Leonidas Fragkiadakis, during the presentation of its annual results last march 30.
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In recent months, the banking group, which employs 11.700 people, sold to tower of arm assets, as part of a restructuring plan agreed with the european Commission, in particular the Turkish bank Finansbank for $ 2.7 billion euros to Qatar National Bank, its subsidiary in Bulgaria to € 610 million to KBC, its insurance business to 718 million to the Dutch Exin, as well as Banca Romanesca Romania to the Hungarian OTP.
This return to the bond markets will be a test of the return of investor confidence. At the end of September, Mario Draghi, the ECB president, has indicated that he planned to anticipate the stress tests for Greek banks, in early may rather than in July for the other banks, these stress tests will assess the need to recapitalise some institutions, prior to the official release of the international rescue plan in August.