2 Min Read
ATHENS, Oct 6 (Reuters) - Small Greek lender Attica Bank will issue government-guaranteed bonds that can serve as collateral to borrow funds from the Greek central bank's emergency liquidity facility (ELA), its deputy chief executive told Reuters on Thursday.
The bank, majority owned by the engineers pension fund TSMEDE, suffered deposit outflows in the last month after the Bank of Greece asked it to freeze lending and address corporate governance issues.
"We will issue 380 million euros of such bonds to have a comfortable collateral cushion for tapping the central bank's ELA (emergency liquidity assistance) window," Deputy CEO Thanasis Tsadaris told Reuters.
All Greek lenders have made use of such bonds under a liquidity support scheme enacted in 2008 in the wake of the global credit crisis after the Lehman Brothers collapse.
"It's a proactive move. Like other Greek banks, we had issued about one billion euros of such bonds since 2009 but retired them all in July this year as we had ample collateral," Tsadaris said.
But Attica, which has a 17.2 percent core Tier-1 capital adequacy ratio, suffered deposit outflows in the last 20 days and had to take action, he said.
The executive said the bank has the full support of the Bank of Greece on the move but formal approval by the EU's competition watchdog DGCom will be needed, given the state guarantee feature of the issue.
Last month Attica's shareholders approved a new chief executive and board chairman at the bank as part of moves to comply with issues raised by a central bank audit.
Apart from corporate governance issues, such as having pension fund officials rather than bankers in executive posts, the audit found that Attica needed to improve its organisation, upgrade information technology systems and deal with high labour costs. (Reporting by George Georgiopoulos; Editing by Toby Chopra)