EGFEY - Eurobank

[kab60]

Creditors earn interest for the temporary use of their capital. What you say is nonsense.

 

That Versailles comment shows you're good at repeating what you were taught in school (by socialists). WW2 started because the UK and France were fucking pussies (giving Germany Czech republics defences and condoning the occupation of Austria) and because the USA didn't give a fuck.

Sorry if I was imprecise, I'm sure you know what I meant. Rates go up according to risk. Never think I had a Socialist teacher, but thanks for the history lesson. Somehow I think you forgot the rise of Hitler. Don't want to put it all on Der Führer, but I'm sure he - and the German struggles in the 30ties - played a minor part as well. I don't want to start a fight, but you might one to read this article (though some think he's a Socialist). I just read it today and thought it was worth my time: http://thewire.in/2015/07/08/thomas-piketty-germany-has-never-repaid-its-debts-it-has-no-right-to-lecture-greece-5851/

[wachtwoord]

True Germany should have paid after WW2 (just like after WW1) but the allied pussied out (with that whole Versailles caused WW2 bs they try to spin on us in school). The Germany of today is not the Germany of '45 and you cant make them pay now.

 

Greece should be forced to pay now, not in 70 years. Just take the collatoral. If you dont everyone will take advantage of you.

[kmukul]

 

Will Eurobank need a recapitalisation?

 

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?

Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

 

Thanks a lot everyone

[investor-man]

 

Will Eurobank need a recapitalisation?

 

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?

Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

 

Thanks a lot everyone

 

The Athens Exchange is closed and has been since they imposed capital controls. I'd imagine it'll open back up soon since the ECB is now providing emergency funds

[morningstar]

 

Will Eurobank need a recapitalisation?

 

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?

Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

 

Thanks a lot everyone

 

For now, the stock is just halted along with other Athens-listed stocks.

 

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.

[MrB]

 

Will Eurobank need a recapitalisation?

 

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?

Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

 

Thanks a lot everyone

 

For now, the stock is just halted along with other Athens-listed stocks.

 

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.

Wouldn't this also apply to NBG and NBG-PA, which currently trade at P/BV of 0.37x ??

Surely the market would have priced those at 0 by now?

[morningstar]

 

Will Eurobank need a recapitalisation?

 

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?

Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

 

Thanks a lot everyone

 

For now, the stock is just halted along with other Athens-listed stocks.

 

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.

Wouldn't this also apply to NBG and NBG-PA, which currently trade at P/BV of 0.37x ??

Surely the market would have priced those at 0 by now?

 

I certainly wouldn't want to be long those either. I'm highly skeptical that any of the 4 major Greek banks still have significant equity value after this 3 week bank suspension, and nothing the Eurogroup has done so far indicates to me that a (pointless) bailout of private equityholders is on their agenda. We'll see though - not a holder of any of these securities so I haven't followed exactly in what format Greece has agreed to transpose the BRRD.

 

I think the best model however for what's likely to occur is the Espirito Santo restructuring last year in which shareholders were wiped.

[muscleman]

I am surprised that the Athens exchange still hasn't resumed trading and capital control is still in place. Does ECB plan to choke Greece to death even after the bailout deal?  :o

[Eye4Valu]

Wilbur Ross has made several recent TV appearances. He didn't mention anything about his investment being wiped out in a restructuring. In fact, he reiterated that EGFEY has a liquidity issue, not a solvency issue. He believes his equity investment will be successful. He mentioned that once the deal is signed, deposits will slowly but surely come back, just like they did last time. ELA should provide liquidity until then. Granted, there are high loan loss provisions, but why was Wilbur unconcerned and convinced that EGFEY is solvent. Shouldn't he know a thing or two about his investment.

[muscleman]

Wilbur Ross has made several recent TV appearances. He didn't mention anything about his investment being wiped out in a restructuring. In fact, he reiterated that EGFEY has a liquidity issue, not a solvency issue. He believes his equity investment will be successful. He mentioned that once the deal is signed, deposits will slowly but surely come back, just like they did last time. ELA should provide liquidity until then. Granted, there are high loan loss provisions, but why was Wilbur unconcerned and convinced that EGFEY is solvent. Shouldn't he know a thing or two about his investment.

 

Let's see when capital control will be lifted. Usually after it is lifted, people will withdraw cash for a while and then put the money back. There are $43 bn cash hidden under the mattress that they can give back. This will help a lot to reduce the ELA by half.

[randomep]

 

Can someone plz educate me:

 

If one suspects that any Greek bank is insolvent. It really means assets are less than liabilities.  How exactly did the bank assets shrink? is it that Greeks are defaulting en-mass? or is it that banks own government debt which the government cannot pay back?

[kiwing100]

 

The bank may be solvent on the latest balance sheet but as I saw Mario Draghi in the press conference, they also consider the forward looking equity.

 

Let's take a quick look at the assets which are likely to be subject to revaluation and hence impact the bank's prospective equity:

 

Preliminary estimates would suggest a total of Euro 45,405 mn (1225% of common equity) would be in this basket at the very least

 

All figures taken from the bank only financial statements at March 2015 which would exclude offshore bank assets in their subsidiaries in Cyprus, Bulgaria, Romania, Serbia and Ukraine and less likely subject to writedown if we focus mainly on the events in Greece.

 

 

1  Net loans 20,064mn (958% of common equity) - this assumes that all wholesale loans have no credit risk and all the provisioning made relates to non wholesale loans.  It also assumes that all the loans are made domestically within Greece and not offshore loans .

 

This is mainly mortgage lending, consumer lending, and small business lending.  With the deterioration in the business environment, small business lending is likely to require further provisioning.  If there are cuts to pensions and welfare payments, and higher unemployment rates, then mortgage lending and consumer lending will require additional provisioning due to increased risk of borrower's inability to meet debt repayments to the bank.  Also the collateral is probably falling in price. 

 

Note that wholesale loans are 416% of common equity so that is additional exposure should there be credit risk.  I'm not sure of the nature of wholesale lending - if it is to other financial institutions, or large corporates.

 

2. Investment securities 3,749mn (101% of common equity)

 

These are Greek sovereign securities only - Greek bonds & Greek treasury bills. 2,157 mn is Greek treasury bills (58% of common equity).  These securities will be subject to mark to market, but not sure what the ultimate recovery value of these assets will be as these securities may need to be restructured.

 

3. Derivative assets 2,215 mn (60% of common equity)

 

Not sure what the market value of these assets are given market price movements.  There is an offsetting derivative liability of 3,159mn but unsure if these are truly offsetting. The worse scenario would be that the derivative asset could fall in value, and the derivative liability (85% of common equity) increase in value which would have a magnified impact on the common equity.

 

4. Deferred tax assets 3,948 mn (107% of common equity)

 

Uncertain what value these assets will have given that this is a result of tax credits given by the Greek government for previous losses of the bank.

 

 

 

 

 

 

 

[SharperDingaan]

Every one of these situations is different & extremely fluid in its first few days.

 

Typically there is an initial run. Folks need to pay bills, & the fearful rush to draw out what they can, while they can. Everybody says calming things & prays they can meet the drawdown.

 

Loan values initially plummet on uncertainty. The last 3 weeks may well have pushed a good number of commercial loans under. Similar thing with mortgages entering the early stages of default. It does not mean they will ultimately default, but it does mean that the amount the bank can currently borrow against them will have dropped like a brick.

 

As in every sovereign, the majority of the domestic bank reserves are invested in domestic sovereign bonds. Even in a stable market those Greek sovereign bonds would not be worth very much; with every bank selling, & no buyers - they are worth even less, if you could sell them at all.

 

On day 1 the existing equity is very likely worthless; on day 30 it is probably worth more – if only because the bank has withstood the liquidity run. On day 1 – who that may be, and how much they may be worth, is a crap shoot.

 

At around 45-60 days there is usually sufficient stability to allow a recapitalization and restructuring of all the asset portfolios to meet the changed conditions. Interest holidays, term extensions, etc. with the cumulative offsetting liabilities being passed through to the sovereign central bank.

 

Long term it is often a very good opportunity, but you have to treat every $ of initial new investment as an immediate 100% write-off.

 

Different strokes.

 

SD

 

 

[muscleman]

I am surprised that after so many days, capital control is still not lifted.

[muscleman]

http://www.ibnlive.com/news/world/greek-banks-to-reopen-on-monday-as-revamped-cabinet-gets-to-work-1022391.html

 

Finally, the banks will reopen. Does this mean complete lift of capital control?

[kiwing100]

 

Investors in Greek Banks Face Wipeout on Recapitalization

 

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435

[muscleman]

http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

 

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

 

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

 

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?

[Spekulatius]

http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

 

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

 

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

 

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?

Because the Greeks know too well that the situation is still precarious and would probably withdraw a lot of funds and starve their banks of deposits. It will take a while to get the confidence restored.

[randomep]

 

 

So, why did Cyprus decide on the depositor haircut? Because the banks had liquidity problems? or because the banks were insolvent, and if the latter then why were the banks insolvent?

 

Also in the event of a depositor haircut as in Cyprus, is this across all personal accounts or same for business?

[morningstar]

http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

 

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

 

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

 

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?

 

The usefulness is that people have cash for basic expenses like food. If the withdrawl limit were lifted the deposit flight would wipe out the banking system... Even if the ELA limit were not in place, available collateral in the Greek system would not be sufficient.

 

Small steady increases in ELA for the time being should fund the controlled withdrawals until the banks can be recapitalized - the cash provided in the recap would provide liquidity to open the banks more completely.

 

I think deposit haircuts are unlikely here - part of the upside of this deal for Greece is that the Eurogroup looks willing to recap the banks without depositor loss-bearing, even though this is probably a money-losing proposition for Germany et al. I do still this equity and sub debt holders face effective wipeout. The senior bonds are the interesting gray area for investors, I think.

[Spekulatius]

 

 

So, why did Cyprus decide on the depositor haircut? Because the banks had liquidity problems? or because the banks were insolvent, and if the latter then why were the banks insolvent?

 

Also in the event of a depositor haircut as in Cyprus, is this across all personal accounts or same for business?

Because a lot of larger accounts were held by Russians and it is always a good idea to screw foreigners rather than the own constituents.

[Vizi1]

Fairfax mentioned in this WSJ article with respect to its Greek Bank Investment

 

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435

[muscleman]

Fairfax mentioned in this WSJ article with respect to its Greek Bank Investment

 

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435

 

A lot of people don't understand bank investment. One of the major risk is a regulator's push for capital increase, which will usually wipe out existing shareholders. I've seen this many many times in US and EU ever since I started learning bank investing from PlanMaestro back in 2009.

Regarding the current health of these greek banks, it is really hard to say how much damage has the 3 week bank shutdown done to these bank's balance sheet. Maybe nothing. Maybe a lot. But investors don't have a saying here. If the regulator thinks a capital increase is needed, then existing shareholder will be wiped out, no matter what the truth is.

 

I've been watching Greek banks and waiting since Prem bought. I felt lucky that I never bought one share. I was waiting for the GDP growth to recover and it did happen earlier this year, but the stock was trading at 90% book. Too high for me. Then things got worse and worse and the stock went down to 25% of book. Had the stock been trading at 25% of book in January this year, I might have built a large position and become a sucker.

 

Had the clowns in Syriza done the bailout deal in January, Greece would have been in a much better shape than what it is now. Too bad for the Greek people who elected these clowns.

 

[SharperDingaan]

You may want to dig a little deeper into what capital controls actually mean.

 

Current foreign currency denominated exports (tourism, goods, services, migrant labour earnings repatriation) less than/equal to foreign currency imports (oil, gas, food, service and manufacturing components). Encourage tourism, promote youth working abroad, dump product for FX earnings, domestic versus foreign suppliers will all help. But they really need some subsidization – discount energy, drugs, & somebody else to pay the cash cost of their NATO security commitments. 

 

Capital outflows on foreign sourced debt maturity + interest greater/equal than domestic sourced debt issuance and internal foreign currency investment (assume everything is Euros). Lots of possibilities here ranging from debt defeasement via direct subsidy, direct debt forgiveness, extending term, recapitalizing Greek banks with a transfer of ECB owned Greek bonds, and growing their way out. The more they can reduce the net annual drain of capital to creditors outside of Greece, the quicker they can come out from under their capital controls.

 

We think that a recap via a transfer of the ECB Greek bond holding (& then continuously rolling them) has to be very high on the list.

 

We also think that having one euro member under capital controls, when the rest are not; is not politically sustainable for any protracted period. You cannot claim to be a free trade zone within the euro umbrella – and then not practice it so publicly.

 

It really means a priority upgrade to Euro 2.0, and the pending retirement of dumber.

 

SD

 

[Eye4Valu]

I guess what is confusing me is that the ECB will not provide ELA if the recipient institutions are insolvent. I'm sure the ECB is aware of the solvency position of the greek banks. If they were insolvent, ELA would have have been cut off, correct? Also, it appears that the Bank Recovery and Resolution Directive (BRRD) is utilized only after a determination that an institution is insolvent and cannot be recapitalized via private methods. If the greek banks are solvent, would BRRD still be utilized? This would not make sense in light of its mandate.

 

I know that a review of the banks solvency will follow the signing of the 3 yr. deal, which at the moment, looks likely to be agreed upon prior to August ECB loan maturities. Perhaps we won't know until then which banks are considered insolvent or how they will be recapitalized. I do find it interesting that Wilbur Ross, who has to know about EFGEY's solvency, believes EGFEY is solvent. I heard him state that in an interview a few days ago when asked whether EGFEY would be taken over or combined with another bank. BRRD did not come up in the interview. 

 

Obviously time will tell. Meantime, I would expect investor sentiment to be quite negative with everyone guessing that shareholders will be wiped out. Maybe they will be. At the same time, I believe many of these same people were also predicting Grexit a short time ago. Will be interesting to see if Wilbur or Prem get wiped out. Anyone recall either one be handed a goose egg recently?