National Bank of Greece sees 500 million euro boost

National Bank of Greece (NBG) will be able to move ahead with the large securitizations of bad loans under the Hercules Asset Protection Scheme and cover losses arising from the sale of its insurance subsidiary thanks to 500 million euros of one-off gains arising from a swap with the Greek state involving new 30 year bonds.

These are bonds that expire on March 2023, 2025 and 2026 which were acquired by the lender in February as part of the Titlos swap.
 
This transaction, from which NBG will record a book gain of 500 million euros, could only be executed with the approval of the Greek state. The extraordinary gains are a bonus for the bank which would not have been otherwise able to move ahead with large securitizations of non-performing loans (NPLs) under the state guarantee Hercules plan. The gains will help also help cover losses connected with the sale of National Insurance.

The offers received so far on National Insurance are considerably lower than its book value as the Greek lender must push ahead with the sale, in line with commitments to competition regulators.

The one off gains from the bond swap will boost NBG's capital position that received a boost from the first Titlos swap. In the first nine months of last year, NBG showed a one-off profit of 300 million euros. This consisted of 65 million euros from non-recurring gains related to the exchange of the Interest Rate Swap (IRS) with Greek government bonds, 118 million euros from the sale of Greek government paper and 30 million euros from the sale of the Grand Hotel. Additionally, NBG took a 60 million euro profit from the sale of its stake in Pangaea.

The stake owned by Greece, via the Hellenic Financial Stability Fund (HFSF), in NBG reaches 40.39 percent, making it the highest among the country's systemic banks with a big difference from the rest.

NBG's board has faced criticism over its business plan, which was presented in March, for failing to take action quickly with most of its initiatives concentrated for 2021-2022.

Yiannis Papadogiannis