Large capital needs, ranging from 300 - 600 million euros, are required by Attica Bank, based on a new business plan prepared by consulting firm Boston Consulting Group (BCG), on behalf of the lender.
According to Business Daily’s sources, BCG was expected to present yesterday the draft business plan for the non-systemic bank. This draft business plan includes three scenarios, which are differentiated on the basis of the amount of NPLs to be securitised. The amount of NPLs then determines the amount of capital needed.
If all the NPLs are securitised, the same sources say, funds of 500 million euros will be required. If half of the funds are securitised, it will be necessary to raise 300 million euros (including development funds amounting to 50 million euros).
Sources closely involved, however, rule out the possibility of such a large capital injection and explain that the shareholders agreement signed in December 2021 provides for funds of 345 million euros. "The 600 million euros are based on the very fast growth and elimination of NPLs from this year. This is unrealistic and excessive," they tell BD.
Τhe bank's goal is for the securitisations to be carried out through the "Hercules II" program, however, because this is by no means certain, the Bank of Greece has reportedly asked Attica Bank to prepare a Plan B for the securitisation of NPEs outside the "Hercules" program.
The question that arises now, regarding the share capital hike, is which investor will participate, given the increased needs. Ellington owns (directly and indirectly) a 24.57% stake in the bank and is expected to become a majority shareholder, leading to the disinvestment of the HFSF, which currently owns 63% of shares.
The 14th Enhanced Supervision Report published recently states that the HFSF intends to participate, within the framework of its responsibilities, in the second share capital increase of Attica Bank, along with private investors, as well as in any other capital enhancement actions that will be required in order to implement the bank's business plan.
The new business model and the employees
According to the same sources, the business plan includes specific guidelines for Attica Bank's operating model, as it is estimated that it is not viable to continue to operate in retail, within the framework of general banking. As far as lending is concerned, BCG's proposal is to turn to small and medium-sized enterprises in order to fill the gap that actually exists in the Greek market, especially in the financing of SMEs.
This model, however, provides for a drastic contraction of the network of 50 stores that currently operates across the country. Through a digitized model, the bank will serve its business customers mainly online, which means that it will operate with significantly less staff. According to 2021 data, Attica Bank had 770 employees.
Sources say that the staff cuts will be achieved through generous voluntary redundancy programs - as has been the case in the last decade in systemic banks. In April, the bank completed a voluntary exit program in which about 100 employees participated.
Apart from the carrot, however, the stick is expected tο support the voluntary redundancy programs, given that Ellington has stated that it will not tolerate insufficiently trained staff.