Greece's ATEbank the only Greek lender to fail EU-wide bank stress tests last year, announced on Tuesday the terms of a 1.26 billion euro rights issue aimed at boosting its capital.
The move is a further step by the state-controlled bank to deal with the country's huge debt crisis, which devalued its government bond portfolio and increased its bad loans.
The bank plans to issue 1.177 billion new common shares, 13-for-1 at 1.07 euro each, its board of directors said.
The subscription price reflects a discount of 31.7 percent from the theoretical ex-rights price based on the weighted average close of the last 6 months.
ATEbank said the plan will entail a 1-for-10 reverse split, with an increase in the par value of its common shares to 7.2 euros from 0.72 euros.
It will then decrease its share capital by 597.6 million euros, and cut the par value of its shares from 7.20 to 0.60 euro, in order to create a special reserve of an equal amount.
The lender will propose these terms to its shareholders on April 29.
The government, as a major shareholder, has said it will fully exercise its rights by contributing 974 million euros.
ATEbank was the only Greek lender to fail the pan-European stress test last year. The simulation revealed a Tier I capital ratio of 4.36 percent -- above the regulatory minimum of 4 percent but below the stress test threshold of 6 percent.
The rights offer, to be completed by July, will raise its total capital adequacy ratio to 12.54 percent, the lender said last month.
by Renee Maltezou and George Georgiopoulos
source: Reuters
