Greece’s central bank on Sunday said the country’s main four lenders would be recapitalized separately, a move that put on hold a planned merger between two of them.
“The Bank of Greece confirms that the recapitalization process for the four systemic banks [National Bank, Alpha, Eurobank and Piraeus] is proceeding normally and will conclude in April in any case,” the central bank said.
“All four banks have already called — or will call in the coming days — shareholder meetings to approve capital increases,” it added.
National Bank and Eurobank were several months into a merger process that foresaw a joint recapitalization.
However, a Greek finance ministry source said on Sunday: “Further procedures [on the merger] are suspended.”
Greece’s so-called troika of creditors — the EU, IMF and the European Central Bank (ECB) — had reportedly expressed concern that the new NBG-Eurobank entity would both dominate the Greek market and would be tough to recapitalize.
“[The creditors] do not like the creation of such a major player with a market share of around 40 percent,” Bank of Greece Governor George Provopoulos said in a televised interview last week.
“The troika says, and I can also say, that there will be a greater difficulty in a combined National Bank-Eurobank entity, with capital needs in the order of 1.5 billion euros [US$1.94 billion] or slightly higher, a very large sum under the current circumstances. So there is a concern that if private investors cannot be found, it will come under state control,” he told state television NET.
The Bank of Greece announcement on Sunday came after new talks between the creditor representatives and Greek Prime Minister Antonis Samaras on Sunday.
Their report will determine whether Athens will receive a loan disbursement of 2.8 billion euros pending since last month.
The recapitalization of Greek banks, who took a major blow last year in helping the country reduce its sovereign debt, is a condition for the continued release of EU-IMF rescue loans for Greece’s crisis-hit economy.
A sum of 50 billion euros out of the total EU-IMF bailout fund of 240 billion euros has been earmarked for this purpose.
Under the original plan, at least 10 percent of new capital was to come from private investors to keep the banks from being effectively nationalized.
This now seems unlikely for National Bank and Eurobank, who will need the full support of the Hellenic Financial Stability Fund, a source close to the process said.
“National Bank and Eurobank have admitted that they will be unable to raise the money,” the source said.
The Bank of Greece said the stability fund would “fully” cover the capital increase for each bank.
However, a source close to the process said that the 10 percent rule “was still available” to whichever bank managed to raise the necessary funds privately.
Alpha Bank has called an emergency meeting of shareholders for Thursday.
Piraeus Bank will follow suit on Friday.
The Bank of Greece governor said in his interview that even if a bank had to turn to the Hellenic Financial Stability Fund for help, “it’s not exactly state control.”
“In the Stability Fund there is ECB representation, and the EU Commission, and the troika has oversight. In no way would the troika want a major bank to operate as a traditional [state] bank. I am also concerned and would not want it to happen. I do not think it will,” Provopoulos said.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San
Clambering hand-over-hand, sweat dripping into his eyes, a durian laborer expertly slices a cumbersome fruit from a tree before tossing it down to land with a soft thump in his colleague’s waiting arms about 15m below. Among Thailand’s most famous and lucrative exports, the pungent “king of fruits” is as distinctive in its smell as its spiky green-brown carapace, and has been farmed in the kingdom for hundreds of years. However, a vicious heat wave engulfing Southeast Asia has resulted in smaller yields and spiraling costs, with growers and sellers increasingly panicked as global warming damages the industry. “This year is a crisis,”