Clock ticking for resolution of Greece's Postbank

By George Georgiopoulos

ATHENS | Fri Jan 4, 2013 6:44am EST

Jan 4 (Reuters) - Greek banks eyeing state-controlled Hellenic Postbank (TT) are expected to express initial interest by Friday, marking the next stage of the sector's consolidation designed to help cope with the debt crisis.

Postbank, 44 percent government-owned, is to be split into good and bad parts after authorities deemed it non-viable. Its healthy part will either be sold to another bank or run as a stand-alone entity, while the bad would be liquidated.

Battered by rising loan impairments and losses from government bond writedowns, the country's banks have embarked on a merger and acquisition drive to help them grapple with the fallout from the country's devastating debt crisis.

"Banks that have received support by the HFSF must submit their interest to the fund for approval before binding bids are routed to the Bank of Greece," an official at bank support fund HFSF said, declining to be named.

Among potential suitors, National Bank and Eurobank each hold stakes of about 5 percent in Hellenic Postbank. Eurobank is already considering a merger offer by National Bank to form the country's largest bank group.

Hellenic Postbank itself holds a 22 percent stake in smaller Attica Bank, which is also seen by analysts as a likely suitor.

BINDING OFFERS

While the resolution process for Postbank is run by the central bank, the Bank of Greece, the Hellenic Financial Stability Fund or HFSF is also involved as the future major shareholder of Greece's top four banks.

HFSF will assess any offers for TT by the big four lenders. After its approval, binding offers can be submitted to the central bank.

Greece and its international lenders have earmarked 50 billion euros ($65 billion) from the country's 130 billion euro bailout to recapitalise the country's four systemically important banks and wind down others deemed not viable.

Authorities set up the HFSF as a capital backstop to inject most of the capital in the recapitalisation of viable lenders.

The big four - National Bank, Eurobank, Alpha bank and Piraeus - have already received capital support from the HFSF, which will become their major shareholder once the recapitalisation is completed.

The four got an 18 billion euro advance from the HFSF in May and another 9.5 billion in December, bringing the total to 27.5 billion - the amount of fresh capital the central bank has said they need to restore their solvency ratios.

Under the plan, the four lenders will have to issue new common shares to achieve a core Tier 1 capital solvency ratio of at least 6 percent and contingent convertible bonds or CoCos to boost the ratio to 9 percent.

The timetable for the recapitalisation of the big four calls for completion of CoCo issues by the end of January 2013. The contingent convertible bonds will be fully underwritten by the HFSF fund.

Banks' share issues must be completed by the end of April. ($1 = 0.7636 euros) (Editing by David Holmes)