Wall Street Journal
February 1, 2011
Congratulations to Alex Manos, chief executive of Piraeus Bank, for pulling off one of the more unlikely rights issues the market is likely to see this year. The Greek bank with a market value of €1.2 billion ($1.64 billion) has just raised €800 million in new equity in a deal that saw 97.15% of the rights taken up and the remaining rights massively oversubscribed. That's not bad given the Greek economy is forecast to contract another 3% this year, the Greek government and banks remain shut out of markets amid fears of a sovereign default and Piraeus's own shares trade at just 0.4 times book value.
But whether Piraeus derives much immediate benefit from the rights issue is doubtful. Although the bank will now have a core Tier 1 ratio of 9.8%, up from 7.8%, there is little prospect of it gaining access to funding markets so long as the government remains shut out.
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