Eurobank officials said the institution will need to put itself in the hands of the Greek state’s lender support fund, which will fully and immediately implement its recapitalization, and draft a strategy toward strengthening the lender via the acquisition of smaller banks in the local market.
The Hellenic Financial Stability Fund (HFSF) will cover the 5.8 billion euros ($7.5 billion) that Eurobank needs as early as next week, after the bank’s general meeting, it the first systemic lender to become fully recapitalized since former finance minister Evangelos Venizelos put 74 percent losses on banks and investors to write down Greece’s debt.
Eurobank officials said that resorting to state control would help it get the funding it needs. The bank has been especially aggressive in going after customers who can’t pay loans, mortgages and credit cards because of deep pay cuts, tax hikes and slashed pensions imposed by the government on the orders of international lenders, including forcing people who’ve paid their loans to pay them again if they don’t get a technical letter of discharge from the debt.
Sources from Eurobank said that the decision for immediate recapitalization was the best way to go given that it was technically impossible for the bank to find private participation in its capital increase in such a short period of time, following the suspension of its merger with National Bank which has 85 percent of its share, media reports said.
Eurobank is one of Greece’s four major banks alongside National Bank, Alpha Bank and Piraeus Bank, which have recently consolidated their position by absorbing smaller lenders and foreign subsidiaries, including those of crisis-hit Cyprus. The four big lenders were allocated a fund of 50 billion euros ($65.3 billion) from the country’s Troika bailout but needed to raise 10 percent of total recapitalization from private investors to avoid nationalization.
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