Alpha Bank recruits JPMorgan and Goldman to increase its capital by 800 million euros

By George Georgiopoulos

ATHENS (Reuters) –Alpha Bank, one of Greece’s four largest lenders, said on Friday it had hired JPMorgan and Goldman Sachs as advisers on a plan to raise capital by around € 800m (€ 980m dollars) to fund growth plans.

“The proposed fundraising aims to take advantage of favorable market conditions and the bank’s strong financial position,” Alpha Bank said in a stock exchange report.

The bank said it viewed the outlook for the Greek economy as “particularly positive” and wanted to support the government’s efforts to boost economic growth and attract foreign investment.

The announcement lowered Alpha’s shares by 30% to 0.868 euros on the Athens Stock Exchange, causing the exchange’s banking index to drop 14.9% to 482.85 points.

Since mid-March, shares of Greek banks had climbed around 22% to a high of 635.72 points on the index, before a correction began this month.

“It’s a pretty classic reaction amid fears of dilution, as new shares are issued at a discount to the going market price,” said one banker who declined to be named.

Alpha Bank’s total capital adequacy ratio was 18.4% at the end of December, while its basic Tier 1 capital ratio stood at 17.3%.

“This is not about facing a capital shortfall, this is not a recapitalization. But the history of Alpha’s shares needs to be explained,” the banker said.

Alpha Bank says it already has adequate capital buffers to further reduce the risks on its balance sheet related to bad loans.

“This will be the first capital increase for the growth of a Greek bank in years,” said another banker. “Alpha sees a unique opportunity to finance an expected growth phase driven by investment in Greece with new loans that will increase its profitability.”

Separately, sources told Reuters that Italian payments group Nexi is in talks with Alpha Bank to take a stake in the Greek bank’s payments business for retailers.

Alpha Bank, 11% owned by Greek bank bailout fund HFSF, reported net profit of 103.7 million euros last year, down slightly from 105.3 million in 2019 ($ 1 = 0.8179 euros).

(Reporting by George Georgiopoulos; Editing by Kirsten Donovan and Kevin Liffey)