SSM grants Piraeus extension

Lender now has another nine months to find buyers for its 500-million-euro bond to boost capital base

Piraeus Bank has formally secured an extension from the European Central Bank for the coverage of its 500-million-euro corporate bond that will count toward its Tier II capital.

Kathimerini understands that the ECB’s Single Supervisory Mechanism (SSM) has given Greece’s leading bank in assets a ninemonth extension from the original deadline of December 31.

The approval of Piraeus’s request to that effect came after a Piraeus management decision not to pay the contingent convertibles (CoCos) coupon for 2018, saving some 160 million euros. This decision allows the Greek lender to strengthen its capital by 36 basis points, easing capital pressure for this year.

As the bank’s administration has announced, the decision to suspend the payment of the coupon stems from the options granted from the agreement with the Hellenic Financial Stability Fund and will not be repeated next year, when the coupon will be paid out normally.

These moves give the bank time to implement its announced capital strengthening plan, which according to the group’s management is 85 percent complete.

Meanwhile, the tender for the sale of the Henry Dunant Hospital in Athens is heading for failure, as sources say the improvement bid submitted by the Onassis Foundation has been deemed unsatisfactory by Piraeus Bank.

That is because the bid falls short of the asset’s value as included by Piraeus in its books (amounting to 113 million euros). Sources say the Onassis Foundation bid does not exceed 80 million euros and if the bank were to accept that it would have to incur losses of more than 30 million euros. According to the same sources, the offer included a proposal for the foundation to undertake the 75-million-euro corporate bond, but did not come with guarantees for its repayment terms when the hospital would be passed on to the state, as the agreement with the government provides for.

The Henry Dunant Hospital sale is not included in the Piraeus restructuring plan for 2018, so decisions for that have now been postponed until next year.