Menko Posted December 2, 2015 Share Posted December 2, 2015 Thank you for all the nice analysis of the past weeks. I will add some thoughts as a thank you note. I think the issue many felt got solved today by the market: the shares are priced now at a bit less than EUR 1, the price of the rights issue, i.e. less than the price paid by Prem Watsa and Wilbur Ross, so to say. We originally bought our stake at on average 7.1 cents and today invested quite a bit more. The book value of the bank is now stated at circa 2.6 EUR per share, and the EUR 1 price is less than half of book value. There is a large DTA (deferred tax asset) of course and, adding my two cents, this is possibly something that can be of help: the loan provisions have risen to more than 11bn EUR. Total equity is now circa EUR 7bn (not only common equity yet all equity securities) and what if these provisions are not completely absorbed by actual future loan losses? Every EUR 100m not used will lead to quite a nice addition to total equity potentially and certainly to common equity. We can maybe look at Bank of America and Citigroup with regards to provision reduction examples since 2008/2009. Eurobank is possibly in a more difficult situation now. E/A is now close to 10% if we take the numbers of the bank at face value. We are willing to invest 5 to 7 years in this bank. Having worked in Greece in 2009 for a bank as part of their global debt restructuring unit: this will take time, most likely. This is hard work and I thank the people working in the "Troubled Assets Group" of the bank. TAG Team? The restructuring work will be hard work, and not always fun as people, families, and companies are involved. Every time a Eurobank TAG milestone is reached, or when waiting in the coming years, may I suggest, to bring some lightness: One last thought: if the bank could earn a 1% return on assets in the future, 1% of EUR 75bn in assets (I mean net profit here) divided by 2.19bn shares would lead to close to EUR 0,35 of net earnings per share. I think a P/E multiple of 9 to 11 would be sensible if the 1% is reached. That would lead to a potential value of circa EUR 3.5 per share. As said, book value now is circa 2.6 EUR per share. And additionally: the EUR 75bn in total assets do not include the more than 11bn in provisions. Maybe more than 11bn is needed, maybe less. We may buy more shares in the future, depending on the developments. All the above is not investment advice, and solely for informational purposes. Please keep this in mind. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted December 2, 2015 Share Posted December 2, 2015 Quick question: Are the U.S. ADRs insanely overvalued at this point? Post the 100-for-1 split, the shares basically trade in Athens for right around EUR 1. The ADRs have not yet participated in the 100-for-1 split and trade in USD at 0.011 (or $1.10 post split). Each ADR is representative of 1/2 of a share so it seems like the ADRs are nearly 100% overvalued relative to the actual shares. The ADR should trade around $0.0053 pre-split or $0.53 post split. Am I missing something? Link to comment Share on other sites More sharing options...
rijk Posted December 2, 2015 Share Posted December 2, 2015 too bad that otc grey market shares can't be shorted, otherwise this would be the perfect arbitrage trade..... Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted December 7, 2015 Share Posted December 7, 2015 Quick question: Are the U.S. ADRs insanely overvalued at this point? Post the 100-for-1 split, the shares basically trade in Athens for right around EUR 1. The ADRs have not yet participated in the 100-for-1 split and trade in USD at 0.011 (or $1.10 post split). Each ADR is representative of 1/2 of a share so it seems like the ADRs are nearly 100% overvalued relative to the actual shares. The ADR should trade around $0.0053 pre-split or $0.53 post split. Am I missing something? My ticker in my watch lists changed from EGFEY to EGFED. EGFED appears to be the post-split ADR, though I have no idea why they would change the ticker. After today's 22% drop, shares now trade for $0.56 post-split, or $0.0056 on a pre-split basis. I hope that my observation helped anyone get out of the ADRs. I was fortunate enough to be able to sell about 3/4 of my position for $0.01 and the remainder at $0.0079 so I'm feeling pretty good about it. I'll probably be switching my exposure over to the Athens exchange for increased liquidity - was really sweating getting those orders filled once I realized my shares were at a 100% premium to where they should trade. Link to comment Share on other sites More sharing options...
rijk Posted January 21, 2016 Share Posted January 21, 2016 looks like the shareholder base was not that stable after all, price dropped to €0.67 or 26% tbv Link to comment Share on other sites More sharing options...
rijk Posted February 4, 2016 Share Posted February 4, 2016 eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv http://www.morningstar.com/stocks/xfra/efgd/quote.html Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 4, 2016 Share Posted February 4, 2016 eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv http://www.morningstar.com/stocks/xfra/efgd/quote.html All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00. I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk... Link to comment Share on other sites More sharing options...
MrB Posted February 4, 2016 Share Posted February 4, 2016 eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv http://www.morningstar.com/stocks/xfra/efgd/quote.html All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00. I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk... Go big or go home ;D Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 4, 2016 Share Posted February 4, 2016 eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv http://www.morningstar.com/stocks/xfra/efgd/quote.html All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00. I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk... Go big or go home ;D I don't mind investing in risky situations if I'm expecting to be treated fairly, but that clearly didn't happen here and I'm wary of two-tier investments where some shareholders make out like bandits while the rest take the full weight of the loss. It leaves a bad taste in my mouth. Eurobank is still attractive for all the same economic reasons as it was previously, but I don't quite know what the premium should be for the people in charge being set against you in the event anything goes wrong since I'm a "lower-tier" investor. I might stay away from this for the same reasons I stayed away from BH - I clearly can't trust those in charge to consider my interests. Link to comment Share on other sites More sharing options...
rijk Posted February 8, 2016 Share Posted February 8, 2016 wow, at €0.43 eurobank is trading at 16% tbv....... either greece and the euro are finished or investors are hyper nervous..... http://www.morningstar.com/stocks/xfra/efgd/quote.html Link to comment Share on other sites More sharing options...
MrB Posted February 8, 2016 Share Posted February 8, 2016 wow, at €0.43 eurobank is trading at 16% tbv....... either greece and the euro are finished or investors are hyper nervous..... http://www.morningstar.com/stocks/xfra/efgd/quote.html You mean €0.38 :P “There’s a complete buyers’ strike across the board today, ” http://www.bloomberg.com/news/articles/2016-02-08/greek-stocks-head-for-lowest-level-since-1990-as-banks-tumble Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 10, 2016 Share Posted February 10, 2016 wow, at €0.43 eurobank is trading at 16% tbv....... either greece and the euro are finished or investors are hyper nervous..... http://www.morningstar.com/stocks/xfra/efgd/quote.html You mean €0.38 :P “There’s a complete buyers’ strike across the board today, ” http://www.bloomberg.com/news/articles/2016-02-08/greek-stocks-head-for-lowest-level-since-1990-as-banks-tumble Down another 10% to €0.345. Bizarre - I would have thought that all of the holders left would be strong-hands, but clearly people have needed to get out if they're selling it at a 65% loss from the recap... Anyone have a source on recent flows to the banking sector. Are we seeing client deposits return after the recaps or is money still flowing out of the system? Also, anyone have a recent update on the capital controls? Link to comment Share on other sites More sharing options...
rijk Posted March 3, 2016 Share Posted March 3, 2016 2015 results 35% npl, 65% coverage 44% npe, 52% coverage npe provision & collateral coverage 102% tbv/share €2.45 plenty of work to be done but figures could be called cautiously optimistic? FinancialResults2015_Presentation.pdfQ4_2015_Eurobank_Ergasias_SA_Earnings_Call.docx Link to comment Share on other sites More sharing options...
muscleman Posted March 3, 2016 Share Posted March 3, 2016 2015 results 35% npl, 65% coverage 44% npe, 52% coverage npe provision & collateral coverage 102% tbv/share €2.45 plenty of work to be done but figures could be called cautiously optimistic? The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players. Somehow BoC draws far less investor interest on this board. Any reasons? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 3, 2016 Share Posted March 3, 2016 2015 results 35% npl, 65% coverage 44% npe, 52% coverage npe provision & collateral coverage 102% tbv/share €2.45 plenty of work to be done but figures could be called cautiously optimistic? The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players. Somehow BoC draws far less investor interest on this board. Any reasons? Probably because of Prem and Ross' involvement. I'm not able to do the deep diligence needed to determine asset quality so the fact that there in it gets me more comfortable that someone has done that diligence for me. That being said, the recent recap ought to leave as bad a taste in everyone's mouth as the bail-in that occurred in Cyprus. Link to comment Share on other sites More sharing options...
MrB Posted March 3, 2016 Share Posted March 3, 2016 2015 results 35% npl, 65% coverage 44% npe, 52% coverage npe provision & collateral coverage 102% tbv/share €2.45 plenty of work to be done but figures could be called cautiously optimistic? The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players. Somehow BoC draws far less investor interest on this board. Any reasons? I agree with the general logic that there might be an arbitrage here, but I think the slowdown in momentum of the reforms in Cyprus is a concern, as well as the announcement and retraction of Hourican's departure. I think in this case the "family reasons" are credible, but it still dented confidence. The question is at what price is the difference significant enough to switch? Link to comment Share on other sites More sharing options...
rijk Posted March 8, 2016 Share Posted March 8, 2016 positive developments.... Euro zone to discuss Greek debt relief soon, after reform review http://uk.reuters.com/article/us-eurozone-greece-debt-idUKKCN0W91Q2 Link to comment Share on other sites More sharing options...
muscleman Posted March 10, 2016 Share Posted March 10, 2016 2015 results 35% npl, 65% coverage 44% npe, 52% coverage npe provision & collateral coverage 102% tbv/share €2.45 plenty of work to be done but figures could be called cautiously optimistic? The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players. Somehow BoC draws far less investor interest on this board. Any reasons? I agree with the general logic that there might be an arbitrage here, but I think the slowdown in momentum of the reforms in Cyprus is a concern, as well as the announcement and retraction of Hourican's departure. I think in this case the "family reasons" are credible, but it still dented confidence. The question is at what price is the difference significant enough to switch? The valuation for BoC vs EGFEY in terms of price/book value is similar. However the macro environment is vastly different. "economic growth of 1.6 per cent, a nearly balanced budget with a primary surplus of around 2.5 per cent, a steadily reducing public debt" http://www.jordantimes.com/opinion/nikos-christodoulides/cyprus-economy-turning-page I believe the macro stabilization gives you the margin of safety for banks, not the price/book ratio. We all know what happened when the price/book ratio makes it looks like cheap and then a recapitalization kicks in. In addition, BoC and Hellenic banks are the only players in town. Hellenic is way smaller than BoC. But in Greece you got four players. With that said, I haven't studied EGFEY for quite a few months, so maybe the situation is turning now? Link to comment Share on other sites More sharing options...
rijk Posted March 12, 2016 Share Posted March 12, 2016 fairfax letter 2015 was very turbulent for Greece as it went through a referendum, had capital controls imposed on its banking system, had another election which resulted in a majority government for the Syriza party and was trying to cope with an unprecedented migration of refugees from Syria. Prime Minister Tsipras appointed Euclid Tsakalotos as Finance Minister. Recently, we took ten institutional investors to Greece for an update from the Prime Minister and the Finance Minister. While there are no guarantees in life, it seems to us that the Greek government and the citizens of Greece have clearly rejected leaving the euro (going back to the drachma) and are implementing the reform program required by the Troika. In spite of the massive uncertainties in Greece in 2015, the economy was flat and unemployment came down from 27.9% in 2013 to 24.6%. Housing construction is down over 90% from the high while automobile sales are down 75% from the top. Greece’s economy has hit bottom and given some stability in the political environment, should recover strongly, not unlike Ireland in the last few years. With this as a backdrop, we experienced one of our largest unrealized losses ever in our holdings of Eurobank. As discussed in last year’s Annual Report, in 2014, as part of a large group of institutional investors investing A2.9 billion so as to allow Eurobank to successfully pass the ECB stress test, we invested A400 million at 31 euro cents per share in Eurobank. With the uncertainties of 2015 discussed above and the bank capital controls, the ECB imposed another very severe stress test on the Greek banks that resulted in an additional capital raise of A2.039 billion at 1 euro cent per share – yes, you read that right – 1 euro cent!! At that price, after the issue, Eurobank was selling at 39% of book value and 3.1 times normalized earnings. We invested A350 million for an average total cost per share of 2.2 euro cents versus a book value of 2.5 euro cents per share and a normalized price/earnings ratio of 6.9 times. After a consolidation of 100 to 1, Eurobank began trading at A1 per share. Early in 2016, Eurobank, in sympathy with other European banks, declined to 30 euro cents per share; it is now trading at about 77 euro cents per share. Unbelievable! And they say markets are efficient! We continue to be confident in the management team of Eurobank with Fokion Karavias as CEO and Nikos Karamouzis as Chairman. Our other Greek investments – Grivalia, led by George Chryssikos, Praktiker Greece, led by Ioannis Selalmazidis and Mytilineous, led by Evangelos Mytilineos – continue to do well in a very difficult economic environment. We are very fortunate to have Wade Burton, a member of our Investment Committee, leading the charge on our Greek investments. Brad Martin, also on the Board of Eurobank, has backed him well. Our time will come in Greece! Link to comment Share on other sites More sharing options...
MrB Posted May 17, 2016 Share Posted May 17, 2016 FROM REUTERS - UPDATE 1-Greek lender Eurobank posts first quarterly profit since 2011 11:32 AM Eastern Daylight Time May 17, 2016 * Eurobank posts profit of 60 mln euros in first quarter * Non-performing credit drops to 34.8 pct of loan book * Bad debt provisions fall 33.4 pct from end of 2015 (Adds CEO comment, details) By George Georgiopoulos ATHENS, May 17 (Reuters) - Greek lender Eurobank <EURBr.AT> reported its first quarterly profit since 2011 in the first three months of the year, helped by lower provisions for bad loans and stronger net interest income. Kicking off the earnings season for Greek banks, the third-largest lender by assets reported net profit of 60 million euros ($68 million) after a loss of 175 million euros in the final quarter of 2015. It was Eurobank's first profitable quarter since the third quarter of 2011. "The results confirm that Eurobank is on course to achieve its main aim, to be profitable in 2016. We had the first positive result after five years of unprecedented challenges in the Greek banking system," Chief Executive Fokion Karavias said in a statement. Greek banks are still troubled by large problem loan portfolios after the country's deep, protracted recession pushed unemployment to record highs, making it hard for borrowers to service their debts. More than 40 percent of the sector's loans are Link to comment Share on other sites More sharing options...
rijk Posted May 25, 2016 Share Posted May 25, 2016 In an agreement announced early Wednesday, Greece won additional pledges of debt relief, but nothing substantial until 2018 at the earliest, and only then if it continues to carry out painful reforms. Even so, the accord could help ease concerns about another flare-up of a crisis in Greece as the region deals with a mass influx of migrants and a continuing terrorist threat. Eurozone finance ministers also gave a green light for the next round of aid for Greece, money that would allow the country to pay bills in the coming months. Further final approvals for those disbursements will be needed, but ministers allocated 10.3 billion euros, or about $11.5 billion, for Greece, to be distributed in several stages starting with €7.5 billion as soon as the second half of June. http://www.nytimes.com/2016/05/25/business/international/greece-debt-relief-imf-eurozone-bailout.html Link to comment Share on other sites More sharing options...
vjrao Posted September 1, 2016 Share Posted September 1, 2016 Eurobank just released Q2 2016 results. I am cautiously optimistic. From the press release: Net profit at €46m in 2Q2016 and €106m in 1H2016 Net interest income up 1.3% q-o-q to €388m Fee and commission income up 5.1% q-o-q to €71m Operating expenses down 2.0% y-o-y Core pre-provision income up 5.8% in 2Q2016 and 16.6% in 1H2016 First quarter of negative 90dpd formation (-€16m) Cost of risk 2.0% in 1H2016 Deposits up by €677m in Greece and €1.1bn in total in 2Q2016 ELA funding decreases by €4.6bn March-to-date Common Equity Tier 1 Ratio at 17.0% Consistently profitable international operations: Net profit at €30m in 2Q2016 Links to the press release and presentation are here: https://www.eurobank.gr/UPLOADS/PDF/PR_RESULTS_Q2_2016_EN.pdf https://www.eurobank.gr/UPLOADS/PDF/2Q2016_Results_Presentation.pdf Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 24, 2017 Share Posted March 24, 2017 https://www.bloomberg.com/news/articles/2017-03-23/greek-deposits-bleeding-drama-resumes-amid-bailout-uncertainty http://www.tradingeconomics.com/greece/capital-flows If Greece bankrupts its banks again... Tough situation to be in now that the E.U. called their bluff. Even IMF agrees the debt and terms of the bailouts are unsustainable, but since Greece gave up on its willingness to leave, the E.U. can force it do whatever it wants and Greece will have to do it. Interested in picking up shares here at $0.25, but was burned badly the first time through... Link to comment Share on other sites More sharing options...
rijk Posted July 4, 2017 Share Posted July 4, 2017 sounds like this could be a win win deal, eurobank finally makes some progress with restructuring and fairfax gets cheap assets? or are fairfax/pimco simply "stealing" ultra cheap assets? i hope that there has been a decent bidding process...... https://www.eurobank.gr/online/home/ViewNews2.aspx?id=2233&lang=en Link to comment Share on other sites More sharing options...
lemsinge Posted October 7, 2017 Share Posted October 7, 2017 Seems Kyle Bass is bullish about Greece and is long its banks. https://www.bloomberg.com/news/articles/2017-10-06/bass-bets-greek-elections-called-within-a-year-spurring-rally https://www.bloomberg.com/view/articles/2017-09-19/the-imf-needs-to-stop-torturing-greece Link to comment Share on other sites More sharing options...
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