(NBG) unveiled plans to increase its capital by 2.1 billion euros to cover the shortfall identified by the recent stress tests conducted among Greek banks

MARKET REACTION IS APPALLING

National Bank of Greece (ADR) (NYSE:NBG) sank 14.53% in pre-market trading on Monday after a report the largest banking group Greek, National Bank of Greece (NBG) unveiled plans to increase its capital by 2.1 billion euros to cover the shortfall identified by the recent stress tests conducted among Greek banks.

NBG, present on the market in Romania, is expected to take a decision on the possible capital increase at a meeting of the Board of Directors scheduled to be held on April 15.

Back in March, NBG declared that it will unveil a plan to cover the equity gap without selling new shares. However, the Central Bank of Greece, the Greek financial institution that oversees the system rejected to accept the plan.

Governor of the Central Bank of Greece, George Provopoulos, said last week in an interview with Skai TV that NBG might successfully address whether private investors will prefer this.

“National Bank of Greece wants to seize the opportunity created by high demand for Greek assets to recapitalize quickly,” said Thanassis Drogossis, director Pantelakis Securities.

Two major Greek banks, Alpha Bank and Piraeus Bank last month added almost three billion, mainly from foreign investors to cover capital shortfall identified by the stress tests. For now, Greece has returned to financial markets last week after a break of four years, by selling five-year bonds worth three billion euros at a coupon lower than expected government in Athens.

National Bank of Greece has returned to profit last year, mainly due to the good results obtained by the division of Turkey, Finansbank, lower funding costs and a reduction in provisions for bad loans.

Reuters reported “Greece’s largest lender National Bank has picked Goldman Sachs and Morgan Stanley as global coordinators for a planned equity offering to plug its 2.18 billion euro capital shortfall, a senior banker familiar with the issue told Reuters on Monday on condition of anonymity. NBG had previously said it would not resort to an equity issue to plug the capital gap but would focus on selling non-core assets instead.”

Source: Emerging Markets

Speculative Investment,this sharp correction comes after  Central bank of Greece rejected previous plan by NBG
to cover equity gap without selling shares.
   Market reaction is appalling. Count me out on suggestion to Add Position or Initiate One.