Greece's Alpha Bank raises private capital to avoid state control

ATHENS, June 3 | Mon Jun 3, 2013 5:28am EDT

(Reuters) - Greece's third-largest lender Alpha Bank raised more than the required proportion of a share offering to plug a capital hole from private investors, allowing its existing managers to keep control.

Alpha is the first of the country's biggest banks to successfully recapitalise without falling under the full control of a bank rescue fund, which is financed from Greece's international bailout package.

Greece's four biggest banks, including Alpha, need 27.5 billion euros ($35.6 billion) to repair their solvency after losses on sovereign debt writedowns and bad loans. Their aim is to regain access to capital markets, to help fund the economy out of its deep six-year slump.

Under a recapitalisation scheme agreed with Greece's international lenders, at least 10 percent of new equity issues by its four big banks must be bought by the market for them to stay privately run.

"The recapitalisation is a vote of confidence on the prospects of the Greek banking system and the economy," Alpha's Chairman Yannis Costopoulos said in a statement on Monday.

Subscriptions to Alpha's 457 million euro rights issue was 166 percent, with strong interest from international investors, the bank said, confirming what bank officials told Reuters on Friday.

Together with a 92.9 million euro private share placement, Alpha raised 550 million or 12 percent of its 4.57 billion euro capital need from the market, meaning it avoided issuing costly contingent convertible bonds.

The remaining funds will be pumped in by the Hellenic Financial Stability Fund (HFSF), the state capital backstop, in exchange for shares.

Investors who took part in the capital boost will get warrants for each new share they subscribed for. Each warrant will entitle them to buy back from the HFSF 7.31 shares during the next four and a half years.

Alpha's share capital after the recapitalisation will be 4.216 billion euros divided into 10.92 common registered shares with a par value of 0.30 euros each and 200,000 preferred shares. The HFSF will end up with 9.13 billion shares.

Alpha shares were up 1.04 percent in early Monday trade, outperforming the banking index which was down 0.89 percent.

National Bank and Piraeus are also issuing shares to recapitalise. The country's fourth-largest lender Eurobank was fully recapitalised by the HFSF, falling under its control. ($1 = 0.7716 euros) (Reporting by George Georgiopoulos; Editing by Erica Billingham)