Alpha Bank said on Friday it had hired JP Morgan and Goldman Sachs as advisers on a plan to raise capital by around € 800 million to fund growth plans.
“The proposed fundraising aims to take advantage of favorable market conditions and the bank’s strong financial position,” Alpha said in a stock exchange filing.
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 caused Alpha shares to drop 27%.
“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’s total capital adequacy ratio was 18.4% at the end of December, while its core Tier 1 equity ratio stood at 17.3%.
“It’s not about facing a capital deficit, it’s not about recapitalization. But the history of Alpha’s actions needs to be explained, ”the banker said. Alpha says it already has adequate capital buffers to further reduce the risk 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 investments in Greece with new loans that will increase its profitability.”
Separately, sources told Reuters that Italian payments group Nexi is in talks with Alpha to take a stake in the Greek bank’s payments business for retailers. [Reuters]