Priority to existing National Bank shareholders for the HFSF package

According to Business Daily, the package of shares of the bank will be allocated by the Hellenic Financial Stability Fund (HFSF) in the context of the disinvestment process of the State, with priority to the existing shareholders of the National Bank.

Thus, through the priority, first the demand expressed by existing shareholders of the bank will be met and then new investors will be satisfied.

The priority privilege for the acquisition of the shares of ETE to be allocated by the HFSF will be given to all existing shareholders of the bank, both private and institutional investors, a move that will probably act as a brake on the pressure on the bank's shares on the stock exchange.

According to stock market sources, many investors, particularly foreign and domestic investors, have in recent weeks aggressively sold shares of ETE in anticipation of a buyback at a lower price through the HFSF share placement process.

The same sources said that there are strong suspicions of opening short positions in Ethniki shares as well, anticipating a fall in the price until the completion of the HFSF's package disposal. It is noted that the fall in the National Bank's share price has exceeded 20% since the end of August.  

According to sources close to the process, the relevant preparatory work for the disposal of half of the HFSF's 40% stake in the National Bank of Greece is "running" at an intensive pace, while there is no basis for scenarios of postponing the disposal due to the poor stock market situation. In fact, there is a great deal of interest from foreign investors, especially from high quality institutional investors who have not invested in Greece so far, as the country did not have the investment grade.

According to the plan, up to 20% of the shares of ETE will be allocated, of which about 15% will be allocated to foreign investors and 5% to domestic private investors.

The baton to the National Bank

Early this morning, the HFSF will report on the results of the competitive process for Eurobank shares that was completed last Friday. As there was no other better offer, the HFSF is expected to accept the proposal submitted by Eurobank's management, offering the generous price of €1.8 per share for the 1.4% of the bank's shares held in the HFSF's portfolio.

With the completion of the sale of Eurobank's 1,4 % stake, the HFSF will formally start the process of divestment from Ethniki. It is estimated that the relevant procedure for the placement of the Ethniki package on the market will take place sometime between 8 and 17 November.

Currently, the HFSF controls 40.39% of ETE and the plan is for 20% to be disposed of in November through two parallel processes:

• the allocation of approximately 15% to foreign investors through an offer book
• the allocation of approximately 5% to domestic private investors.

As noted, priority will be given to existing shareholders. Technical details of how the 'priority' will be determined have not been disclosed, but it will be similar to what Piraeus Bank did in the bank's last capital increase, except that this informal right will apply to all shareholders.

Among the options under consideration is the possibility of a smaller stake if market conditions deteriorate. 

The fall in the stock market and the banks

Stock market sources criticise those involved in the process, pointing out that by focusing on securing the participation of large institutional investors and achieving a large over-coverage of the issue, the price was put on the back burner, leading to speculative moves. Many people rushed to sell shares of Ethniki at the 6 euro level seeking to buy them back at a lower price through the HFSF share placement process. Speculative pressure was also seen in the shares of Piraeus Bank and Alpha Bank, whose shares are also held by the HFSF and will be placed on the market.

The speculative pressures found an ally in the general market situation and the pressures on international stock markets. The bank index retreated by more than -20% from the highs of last July, while in the same period the losses of the General Index exceeded -15%.

It is recalled that the HFSF, after the 3 recapitalizations that took place in 2012 - 2015 and the capital increases that followed, currently controls 40.39% of National Bank, 27% of Piraeus Bank, 9% of Alpha Bank and 1.4% of Eurobank.