“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”, according to Journal.
WSJ’s Simon Nixon doesn’t doubt that “Mr. Manos will try to persuade other European banks to open up overnight and very short-term inter-bank lines of credit as a first step on the path back to normality, but it is likely to be a long process.”
However, WSJ doubts whether Piraeus Bank derives much immediate benefit from the rights issue. “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”.
Additionally, Piraeus’s CEO must hope that Piraeus΄s stronger balance sheet will attract anxious Greek depositors, as it would reduce its funding cost and limit the inevitable hit from the rights issue to the bank΄s return on capital, according to WSJ.
source: capital
