After nearly doubling his money supplying a capital infusion to the Bank of Ireland (BIR.IR, Financial)(IRE, Financial), Prem Watsa is eying an investment in another troubled European financial institution, National Bank of Greece (NBG, Financial). The bank this morning informed investors that it is “considering alternative options” to meet requirements to recapitalize Greek systemic banks, with Watsa’s company, Fairfax Financial (FFH, Financial), among them. “FAIRFAX HOLDINGS, among others, has expressed interest in participating in the recapitalization of the enlarged NBG Group,” the bank said.
The deadline for Greece’s three major banks to recapitalize is end-April. Together, they must raise 27.5 billion euros ($37 billion) through common equity and convertible bonds, 10% of which must come from private investors to prevent becoming government owned, Bloomberg reported.
National Bank of Greece's market price has declined 69% over the past year and trades for $1 per share on Thursday.
The announcement of interest from Fairfax comes a week after National Bank of Greece, the nation’s largest bank, issued a tender offer for the shares of Eurobank Ergasias, the nation’s second-largest bank. The merger aims to expedite recapitalization, “streamline operating costs, contain loan impairments and realize significant synergies worth approx. €3 billion in terms of net present value,” National Bank of Greece said in a statement.
Combined, the new bank will have total assets of 177.7 million euros, total loans of 109.7 euros and deposits of 87.9 billion euros, and a footprint in Turkey and southeastern Europe.
National Bank of Greece at the nine months ended September 2012 had core Tier I ratio pro forma of 10.3%, an increase from 9.5% a year previously, and its pro forma total CAR stood at 11.9%, boosted by almost $10 billion worth of infusions from the Financial Stability Fund in May and December, deferred tax and its participation in a Greek government bond buyback program from the Public Debt Management Agency on behalf of the Hellenic Republic.
Amidst the deep recession in Greece, the bank also saw its fourth consecutive quarters of increases in loans 90 days or more past due. Past-due loans reached 18% in the third quarter, up from 11% in the third quarter of 2011, for the group as a whole, and reached 21.9% in the third quarter of 2012, up from 11.8% in the third quarter of 2011, for Greece.
Total deposits in Turkey and southeastern Europe, however, both increased sequentially and year over year. Greek deposits held flat sequentially, at $36.7 billion euros, their third consecutive quarter of positive results.
When asked in a February interview in NBG’s magazine whether the recapitalization programs would help attract private investors, CEO Alexandros Tourkolias responded: “I think that clarification or supplementation of the terms of the recapitalization of Greek banks will eventually serve to attract private investors. I can assure you that everyone involved in the formulation of this framework has understood the issue, and I hope soon we shall reach a level of shared understanding regarding the private nature of banks.”
Watsa’s previous publicized European financial recapitalization took place last year, when he purchased Bank of Ireland stock for $0.10 per share, along with Wilbur Ross, Fidelity and other investors. The stock has since traded up to $0.17 per share on Thursday afternoon, including a 50% rise year to date.
Read more about what compelled Watsa to do the Bank of Ireland investment in his interview with GuruFocus here.
Also, see Prem Watsa’s portfolio here, or check out his Undervalued Stocks, Top Growth Companies and High Yield stocks.
The deadline for Greece’s three major banks to recapitalize is end-April. Together, they must raise 27.5 billion euros ($37 billion) through common equity and convertible bonds, 10% of which must come from private investors to prevent becoming government owned, Bloomberg reported.
National Bank of Greece's market price has declined 69% over the past year and trades for $1 per share on Thursday.
The announcement of interest from Fairfax comes a week after National Bank of Greece, the nation’s largest bank, issued a tender offer for the shares of Eurobank Ergasias, the nation’s second-largest bank. The merger aims to expedite recapitalization, “streamline operating costs, contain loan impairments and realize significant synergies worth approx. €3 billion in terms of net present value,” National Bank of Greece said in a statement.
Combined, the new bank will have total assets of 177.7 million euros, total loans of 109.7 euros and deposits of 87.9 billion euros, and a footprint in Turkey and southeastern Europe.
National Bank of Greece at the nine months ended September 2012 had core Tier I ratio pro forma of 10.3%, an increase from 9.5% a year previously, and its pro forma total CAR stood at 11.9%, boosted by almost $10 billion worth of infusions from the Financial Stability Fund in May and December, deferred tax and its participation in a Greek government bond buyback program from the Public Debt Management Agency on behalf of the Hellenic Republic.
Amidst the deep recession in Greece, the bank also saw its fourth consecutive quarters of increases in loans 90 days or more past due. Past-due loans reached 18% in the third quarter, up from 11% in the third quarter of 2011, for the group as a whole, and reached 21.9% in the third quarter of 2012, up from 11.8% in the third quarter of 2011, for Greece.
Total deposits in Turkey and southeastern Europe, however, both increased sequentially and year over year. Greek deposits held flat sequentially, at $36.7 billion euros, their third consecutive quarter of positive results.
When asked in a February interview in NBG’s magazine whether the recapitalization programs would help attract private investors, CEO Alexandros Tourkolias responded: “I think that clarification or supplementation of the terms of the recapitalization of Greek banks will eventually serve to attract private investors. I can assure you that everyone involved in the formulation of this framework has understood the issue, and I hope soon we shall reach a level of shared understanding regarding the private nature of banks.”
Watsa’s previous publicized European financial recapitalization took place last year, when he purchased Bank of Ireland stock for $0.10 per share, along with Wilbur Ross, Fidelity and other investors. The stock has since traded up to $0.17 per share on Thursday afternoon, including a 50% rise year to date.
Read more about what compelled Watsa to do the Bank of Ireland investment in his interview with GuruFocus here.
Also, see Prem Watsa’s portfolio here, or check out his Undervalued Stocks, Top Growth Companies and High Yield stocks.
