US and UK investors scoop Alpha Bank's new share issue

Alpha, Greece's fourth-largest lender, issued new shares to buy back 940 million euros of preferred shares from the government and cover a 262-million euro capital shortfall revealed in a stress test by the central bank earlier this month.

"The 1.2 billion euros that was raised is an important vote of confidence," the bank's Chief Financial Officer Vassilis Psaltis told shareholders on Friday, adding that 42 percent was placed with British investors and 45 percent with U.S. funds.

The country's second-largest lender Piraeus Bank also completed a 1.75 billion euro ($2.40 billion) share offering earlier this week.A Piraeus Bank extraordinary general shareholders' meeting on Friday approved a board plan for a share capital increase scheme worth 1.75 billion euros in cash, through the issuance of new common nominal shares to be offered to new investors.

Last June, Alpha and Piraeus avoided falling into state hands by raising €550m and €1.443bn respectively from the private sector, but still required €4.571bn of state support for Alpha, and €5.892bn of support for Piraeus.

In the new deals, Piraeus and Alpha raised a combined €2.95bn of fresh capital from the sale of new equity, adding to the €500m raised by Piraeus in a bond issue the week before. The amount raised from the share sales was far more than the €687m the banks were required to raise by the Greek central ban

"The response of international investors exceeded expectations and signals confidence that the Greek economy will soon enter a growth path," Piraeus's Chairman Michael Sallas told journalists.

Piraeus will offer 10 percent of the share issue to local investors next week at 1.70 euros a share.

The country's bank rescue fund HFSF welcomed the successful completion of the share issues.

"The capital raised by private investors further strengthens the capital adequacy of the banks, significantly contributing to the stability of the financial system, and highlights the dynamic return to international capital markets," the fund's CEO Anastasia Sakellariou said.

According to the International Financing Review " there was no shortage of buyers for nearly €3bn of new equity issued by Greece’s largest banks Alpha Bank and Piraeus Bank, but plenty of specialist funds sat on the sidelines, worried that Greece has come too far too fast. " 

“Special situation traders were almost all the demand for last June’s share sales, but they have made their money,” said IFR a banker who worked on one of the offers. “They bought in when the shares were offered at a half times earnings but now the shares are trading at twice that, so they left this deal for fundamental players who are underweight in Greece and need to catch up.”

Greece's bailed-out government is also readying to return to bond markets after four years of exclusion.

Greek banks started to tap markets before an expected wave of fund-raising by European peers, in a bid to boost their capital position ahead of the European Central Bank's health check by November, when it becomes their supervisor.

"Conditions were favourable to raise funds from high-quality investors with a long-term outlook," Psaltis said Reuters.

HFSF, Alpha's biggest shareholder, will see its 82 percent stake in the bank reduced to 70 percent as it did not take part in the capital raising, which will boost the bank's Core Tier 1 capital adequacy ratio to 16.6 percent.

The new shares will start trading on April 4.

Proceeds from Piraeus's equity offering will plug a 425 million euro capital shortfall and pay back 750 million euros of preferred shares owned by the state, bringing its Core Tier 1 capital ratio to 16.8 percent. The HFSF's stake in Piraeus will fall to 67 percent from 81 percent.