A couple of articles regarding the amount of capital required by Greek banks generally (not NBG specific) http://pragcap.com/credit-update-schedule-chicken http://www.reuters.com/article/2012/02/27/greece-moodys-banks-idUSL5E8DR5LD20120227 "Bond swap to wipe out Greek bank capital base-Moody's"
Interesting article regarding timeline of upcoming events: http://www.telegraph.co.uk/finance/...default-after-delaying-bail-out-decision.html Friday 2 March Thursday 8 March bond exchange closes Friday 9 March conference call by Eurogroup Finance Ministers Monday 12 March Eurogroup meeting to decide formally on Greece bailout Tuesday 20 March Probably the only genuine deadline that matters - Greece bond redemption According to this article: http://www.reuters.com/article/2012/03/01/eurogroup-greece-statement-idUSB5E8DF02P20120301 "Eurogroup gives provisional approval for new Greek package" "the bond exchange must be completed first" before banks are recapitalised.
http://www.bloomberg.com/quote/ETE:GA NBG market cap now below 2 billion EUR. Which is quite high for a bank that is insolvent, once its Greek govt bonds are marked down to their March 2012 proper value. The funny thing is that when NBG reports its calendar year 2011 financial results, it may still be using very old (2011) values for these bonds on its balance sheet. 956.09 million shares * 2.08 EUR = 1,988.67 million EUR market cap
"UPDATE 1-Greece gives banks more time to report 2011 results" http://uk.reuters.com/article/2012/03/28/greece-banks-idUKL6E8ES9R120120328 Greece on Wednesday extended the deadline for banks to report their annual results to April 20, allowing them more time to assess the impact of the country's sovereign debt swap and prepare capital plans. On March 12, Greece swapped a nominal amount of 177 billion euros ($235 billion) of government paper issued under domestic law for new securities as part of a restructuring to reduce its debt mountain. The swap inflicted real losses of about 74 percent on private bondholders. Greek banks, holders of an estimated 45 billion euros of bonds, will reflect the hit on their 2011 full-year results. Another finance ministry official said the government was working on the terms of the recapitalisation and would announce them by mid-April.
The price action seems to be that NBG common will be diluted massively. However, the preferreds seem to be holding their price. If NBG survive, there just *may* be a chance that the preferreds will be worth more than current price?
Yes, there is a chance that the preferreds may be worth more than the current price. However it's still risky. For example, if NBG is recapitalized by the issuance of (more) preferred stock to the government, then both the common and the preferred could be diluted significantly.
We now (finally) know when recapitalization plans will be released - 20 April. "Greece to Outline Bank Recapitalization Plan" http://online.wsj.com/article/SB10001424052702303299604577327063371554488.html?mod=googlenews_wsj As announced previously, NBG will release its 2011 "earnings" on Friday 20 April 2012, at 17:30, Greek time (+2:00 GMT). This is 10am in New York. A conference call for the presentation and discussion of the results is scheduled to follow at 19:30 Greek time the same day. (12pm in New York). http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=ETE:GA&sid=arEy8ddyysWI
Wait, but I don't understand. Preferred stock originally has got no votting rights but if the government issues lots of other preferred stock, I assume these new preferreds will also have no votting rights and will have to be paid "dividends" or some form of interest right? If they paid dividends on these new preferreds, don't they have to at least somehow retire their old preferreds (which means NBG-pA) or reestart paying dividends for them as well? If that's the case, this is the scenario that we're all waiting for isn't it? Currently the price is very low because dividends were suspended but if dividends resume, won't it make the NBG-pA more valuable than it is now?
You make some good points - but I don't think that NBG necessarily "has to" retire old preferreds or restart paying dividends. Keep in mind that we're dealing with a government, who have the ability to change the rules or do unexpected things. Specifically - look at what happened with FRE and FNM in September 2008. The government came in over the top of the existing preferred stock by buying "super senior" preferred stock, which not only diluted the existing common stock, but also the existing preferred stock of the two entities.
Thank you very much, what you say is so true. Governments have the means to make the rules so we're always at a disadvantage.