Greece's four largest banks need a capital boost of €27.4 billion to overcome the impact of the country's sovereign debt write-down as they battle to stem growing losses in the rapidly shrinking domestic economy.
A mammoth €200 billion debt restructuring completed by the country earlier this year wiped out the capital base of Greece's top lenders—National Bank of Greece SA, Eurobank Ergasias, Alpha Bank and Piraeus Bank—forcing them to appeal to the government for help.
As part of Greece's second €173 billion bailout package from international creditors, Athens has earmarked about €50 billion for a bank recapitalisation plan. Under the terms of the plan, Greece's bank-rescue mechanism, the Hellenic Financial Stability Fund, will underwrite coming rights issues and effectively take control of the four big banks, which combined account for three-quarters of the banking system's assets. Greek banks will use a mixture of common shares and convertible bonds in order to meet international capital adequacy requirements.
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