ATHENS--Greece's Piraeus Bank SA (TPEIR.AT) has agreed to
purchase the Greek unit of Portuguese lender Banco Comercial
Portugues SA (BCP.LB, BPCGY) in a deal that will provide the local
lender with a capital boost and help prevent the Greek government
from taking complete control of its management.
Before selling the Millennium Bank unit, BCP will recapitalize
it with 400 million euros ($521 million), including EUR139 million
already injected into the bank, the two companies said in separate
statements Monday.
The investment will help Piraeus meet a 10% threshold needed to
keep control of management, amounting to some EUR530 million, as it
turns to the state for aid after being hit with steep losses from
Greece's debt restructuring and rising nonperforming loans.
"The acquisition of Millennium further strengthens our capital
position and earning-generation capability, while the BCP
investment into Piraeus Bank brings us over the minimum 10%
threshold private-sector participation in the upcoming
recapitalization, which is a prerequisite for the bank to maintain
its private character," said Michalis Sallas, chairman of Piraeus
Bank.
"We are confident that we can achieve an even-higher
participation of private investors, in this landmark rights issue
of Piraeus Bank," he said.
It is the first time that a Greek lender has said it will be
able to raise the money as it seeks capital in turn, sending
Piraeus Bank shares more than 17% higher on the Athens bourse in
late trade. The Greek banking-stocks index was up 21% on hopes that
other lenders will be able to follow suit and keep control of
management. In Lisbon, BCP shares raced ahead 4.2% late Monday,
with investors cheered by news of the deal. BCP's Greek unit has
long been a drag on the results of the Portuguese bank, which is
also struggling with a recession at home.
As part of Greece's latest EUR173 billion bailout by its
euro-zone peers and the International Monetary Fund, EUR50 billion
has been set aside to recapitalize the country's four big banks,
which control more than four-fifths of the Greek banking
market.
The ambitious bank-recapitalization plan, already months behind
schedule, is meant to restore the banks to health after they were
wiped out by the country's EUR200 billion debt restructuring last
year. Under terms of the plan, the banks must secure 10% of their
capital needs from the private sector to maintain management
autonomy and retain their private character.
Greece's bank-rescue fund, the Hellenic Financial Stability
Fund, will underwrite the balance--but will have only restricted
management rights if its share in a bank is less than 90%.
In the process, Greece's banking sector has been going through a
rapid consolidation, with the four top banks--National Bank of
Greece SA (NBG, ETE.AT), Eurobank Ergasias AS (EUROB.AT, EGFEY),
Alpha Bank AS (ALPHA.AT, ALBKY) and Piraeus Bank--hoping that, by
bulking up, they will be able to attract private capital for the
recapitalization. Piraeus has already expanded by acquiring the
Greek units of Societe Generale SA (GLE.FR) and the healthy assets
of state-owned farm lender ATEBank SA (ATE.AT).
The Portuguese bank, which last year received government help to
improve its capital ratios, has been losing money in Greece due to
the country's ongoing economic problems. With the transaction, BCP
will also lower its risk-weighted assets by about EUR4 billion, in
turn raising its capital ratios. At December, the bank's core tier
1 ratio was 9.8%.
Under the rights-issue agreement, BCP has committed that it
won't sell its shares in Piraeus for six months.
Write to Stelios Bouras at stelios.bouras@dowjones.com and
Patricia Kowsmann at patricia.kowsmann@dowjones.com.
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