Greece's state-run ATEbank, the only Greek lender to fail EU-wide
bank stress tests last year, said on Wednesday it was planning a 1.26 billion euro ($1.77 billion) rights offer to boost its capital.The move is a further step in the cash-strapped lender's effort to avoid bankruptcy in the wake of the country's debt crisis, which devalued its government bond portfolio and increased its bad loans.
ATEbank, a state vehicle to provide cheap loans to farmers, must now sell non-core assets in exchange for government support, as part of Greece's EU/IMF bailout package.
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 completed by July, would raise its total capital adequacy ratio to 12.54 percent, ATEbank said.
A total 675 million euros of the cash call will be used to buy back preferred government shares, obtained in 2009 as part of a state support package for banks.
"The capital increase will enjoy the support of ATEbank's major shareholder, the Greek state," the bank said in a statement.
Weighed down by bond losses and austerity-fuelled recession, the bank reported on Wednesday a net loss of 438 million euros for 2010, against a 452 million loss in 2009.
Bad-loan provisions dropped 27 percent year on year to 604 million euros, while trading losses reached 193 million euros. Non-performing loans increased from 7.6 percent in 2009 to 11.1 percent of the total loan portfolio by end-2010.
ATEbank, 77-percent state owned, was last year courted by Piraeus Bank, which offered to buy the government's stake. But government indecision prompted Piraeus to withdraw its offer.
by Harry Papachristou and Ingrid Melander
source: REUTERS
