ATHENS--Greece's third largest lender, Eurobank Ergasias SA,
Friday announced plans to move forward with a EUR3 billion ($4.13
billion) share capital increase to cover its basic capital
needs.
The bank said its board of directors has already been convened
to decide on the calling of an extraordinary general meeting.
This comes a day after the country's central bank said Greece's
four biggest banks will need another EUR5.8 billion to shore up
their fragile balance sheets and cope with a mountain of bad loans
that have become another painful legacy of Greece's protracted debt
crisis.
The Bank of Greece said the four banks-- National Bank of Greece
SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias--would
need to present plans by mid-April detailing how they would raise
that capital, such as by selling assets, going to the capital
markets or appealing for further state aid.
Eurobank, now under state control, faces the biggest
shortfall--it needs EUR2.9 billion in capital--followed by market
leader National Bank of Greece SA, which must raise some EUR2.2
billion, the central bank said. Piraeus Bank SA faces a EUR425
million shortfall, and Alpha Bank AE needs EUR262 million.
Eurobank fell under state control last April, as it dropped
plans to raise money from investors and the Hellenic Financial
Stability Fund fully covered a EUR5.8 billion share issue.
After a deep, six-year recession, the collapse of a property
bubble, withdrawals by depositors and a EUR200 billion
sovereign-debt restructuring, Greece's banks are struggling. This
year, they were recapitalized with the help of a European Union
loan, but together they still hold some EUR70 billion in bad
loans--a sum equal to a third of Greece's annual gross domestic
product.
With bad loans still rising and not expected to peak until late
this year, the Bank of Greece had commissioned outside consultant
BlackRock Solutions to assess the banks' loan portfolios, something
the firm also did in 2011.
Write to Nektaria Stamouli at nektaria.stamouli@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires