ATHENS, April 9 (Reuters) - Greek lender National Bank (NBG) will issue new shares and contingent convertible bonds to recapitalise with final decisions on the plan expected on Wednesday when its board reconvenes, an official at the bank said on Tuesday.
NBG, whose plan to absorb subsidiary Eurobank was suspended after objections by the country’s international lenders, aims to have the recapitalisation plan approved by its shareholders by April 29.
“The assembly will decide on a combination of moves - the participation of current shareholders in the capital increase, the right of new investors to take part, an issue of CoCos and a reverse split,” said the official, declining to be named.
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.
NBG’s capital need has been set by the central bank at 9.75 billion euros. That of its 84 percent subsidiary Eurobank at 5.83 billion euros. The two banks will be recapitalised separately.
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, at least 10 percent of banks’ new common equity must be raised from the private sector, otherwise they will fall under the full control of the HFSF.
CoCos will be exclusively taken up by the HFSF.
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. (Reporting by George Georgiopoulos; Editing by Maureen Bavdek)