SSM grants Pi­raeus ex­ten­sion

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

Kathimerini English - - Focus - BY EV­GE­NIA TZORTZI

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.

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