EU enters brave new world of bank bail­ins

By Hugo Dixon

January 4, 2016

Reuters

The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

The European Union entered a brave new world of bank “bail­ins” at the start of 2016. Europe has wasted so much taxpayers’ money on bailing out bust banks in recent years that it is right to try to get investors to help foot the bills in future. However, the tough new regime carries big political risks. The key new rule is that no bank can be bailed out with public money until creditors accounting for at least 8 percent of the lender’s liabilities have stumped up. So­called bail­ins typically mean wiping out creditors’ investments, slashing their value or converting them into shares in the bank. Uninsured depositors could get caught along with professional investors.

Fed and Greece Could Defy the 2016 Bears

18 DEC 22, 2015 2:00 AM EST

By Mark Gilbert

Bloomberg

One of the pitfalls of market-watching, whether for professional strategists or journalistic scribblers, is a tendency to accentuate the negative. (I'm ignoring sell-side equity analysts, whose preordained bullishness is largely indifferent to the economic backdrop.) Gloom, doom and misfortune are more interesting than cheerful optimism. And I'm as guilty as the next financial soothsayer.

But it's often a good idea to try to take an opposing view, no matter how compelling the evidence for pessimism is (here's an excellent roundup of worries from Dave Collum, who combines a passion for markets with his day job as professor of organic chemistry at Cornell University). So here are my two outside bets on what could go right on the biggest financial issues that we're carrying into 2016:

Greece Gets Aid Infusion As EU Counts on Tsipras to Pass Reforms

 Rebecca Christie

 Corina Ruhe

 November 23, 2015 — 8:47 PM EET

Bloomberg

Greece unlocked more of its rescue funds on Monday as the euro area called on Prime Minister Alexis Tsipras to maintain his nation’s commitment to meeting its bailout requirements.

In the first aid payment since August, when Greece secured an 86 billion-euro ($91 billion) third bailout, the euro area on Monday approved a 2 billion-euro disbursement from the European Stability Mechanism firewall fund. This allows Greece to turn its attention to recapitalizing its banks and releasing another 1 billion euros in rescue funds before the end of the year.

Greece's Alpha Bank details allocation of share issue

Mon Nov 23, 2015 2:53am EST Related: FINANCIALS

ATHENS

Read more at Reutershttp://www.reuters.com/article/2015/11/23/greece-alphabank-shares-idUSL8N13I0UK20151123#RWy0sQZD1mWOFAP0.99

Reuters

Nov 23 Greece's Alpha Bank said on Monday new shares issued to fill a capital hole identified in a European Central Bank (ECB) health check would be allocated to investors in a bookbuilding process and to bondholders that took part in a debt-for-equity swap.

Greece’s Piraeus Bank Fails to Raise Enough From Private Investors

Capital shortfall determined through ECB stress tests for the Greek economy

The Wall Street Journal

By STELIOS BOURAS and  NEKTARIA STAMOULI

Nov. 22, 2015 8:06 a.m. ET

0 COMMENTS

ATHENS—Greece’s second-largest lender by assets, Piraeus Bank SA, said Saturday that it didn’t manage to raise all the funds needed from private investors following capital shortfalls outlined by the European Central Bank in October.

This means that Greece’s bank rescue fund will need to prop up Piraeus and Greece’s largest lender, National Bank of Greece SA, with at least €6.3 billion ($6.7 billion).

Euro zone agrees Greece can get next loan tranche, cash for bank recap

Sat Nov 21, 2015 12:03pm EST

BRUSSELS

Reuters

Greece has done all the reforms in the a first package of measures agreed with euro zone creditors, which paves the way for Athens to get the next tranche of loans, the head of euro zone finance ministers Jeroen Dijsselbloem said on Saturday.

Greece is getting very cheap loans form the euro zone bailout fund ESM under its third bailout agreement in exchange for putting its public finances in order and reforming the economy to make it more efficient and competitive.

Greece passes bailout bill but government majority shrinks

Fri Nov 20, 2015 2:19am GMT Related: BUSINESS, WORLD

ATHENS | BY RENEE MALTEZOU AND KAROLINA TAGARIS

Reuters

Greece approved a reform bill on Thursday to secure further bailout funds from its international lenders but Prime Minister Alexis Tsipras' parliamentary majority shrank to just two seats after two dissenting lawmakers were expelled.

The bill, outlining regulation on tax arrears and home foreclosures, paves the way for the disbursement of 2 billion euros (916 million pounds) to pay state arrears and a further 10 billion euro to recapitalise Greece's top four banks.

UPDATE 1-Greece's Alpha Bank prices share issue at 0.04 euros a share

Thu Nov 19, 2015 4:18am EST Related: FINANCIALS

Reuters

Nov 19 Greece's Alpha Bank on Thursday priced its share offering to fill a capital shortfall revealed in a European Central Bank health check, becoming the second Greek lender to raise funds from private investors without resorting to state aid.

Alpha priced the new shares at 0.04 euros each or 2.0 euros after a one-for-50 reverse share split, translating to a 35 percent discount to Wednesday's closing price.

Greece's fourth-largest lender sought to raise 1.55 billion euros ($1.65 bln) from investors to fill a 2.74 billion euro capital gap under the ECB stress test's adverse scenario.

Greece and Eurozone Creditors in Deal to Unlock $13 Billion

By NIKI KITSANTONISNOV. 17, 2015

The New York Times

ATHENS — Greece and its international creditors said on Tuesday that they had reached agreement on the country’s next round of economic changes, a deal that is meant to unlock as much as 12 billion euros, or about $13 billion, in loan money.

Athens had initially hoped the money would be dispensed after the Greek Parliament passed a package of economic measures last month.

But eurozone finance ministers said then that the steps did not fully meet the conditions required for the next milestone payment from the country’s €86 billion bailout package.

Greece Sets Terms for Aiding $15.9 Billion Bank Recap

Nikos Chrysoloras

November 2, 2015 — 2:42 AM EET Updated on November 2, 2015

Greece’s government detailed under what terms it will help banks plug a 14.4 billion-euro ($15.9 billion) hole in their books identified by the European Central Bank, paving the way for the lenders to seek cash from investors for the second time in 18 months.

Greece sets mix of bonds, shares in state aid to recapitalise banks

Sun Nov 1, 2015 11:12pm GMT Related: BUSINESS

Reuters

Greece's bank bailout fund HFSF will provide state aid to recapitalise the country's main banks by buying a mix of contingent convertible bonds (CoCoS) and new shares the lenders will issue, the government said on Sunday.

The Hellenic Financial Stability Fund will supply 75 percent of the aid needed via CoCos and 25 percent in exchange for new common shares the banks will issue, the government's economic policy council said, finalising the architecture of the plan.

U.S. Says Greece Must Lift Bank Governance to Build on Progress

By Rebecca Christie,  Andrew Mayeda

Bloomberg

Greece must improve financial-sector governance now that its biggest banks are moving to sounder footing, the U.S. Treasury’s top international official said.

“There’s a meaningful stabilization of the Greek banks,” Nathan Sheets, undersecretary for international affairs, said in an interview ahead of Saturday’s stress test and asset quality review results.

Greece Outlines Bank Recapitalization Plan

Vote into law is expected on Saturday evening

By NEKTARIA STAMOULI

Oct. 30, 2015 5:14 p.m. ET

0 COMMENTS

ATHENS—Greece unveiled its bank recapitalization framework Friday and is expected to vote it into law Saturday evening, hours after the European Central Bank releases results of its health check on the country’s four big banks.

This will be the third capital increase of the country’s battered lenders since Greece’s debt crisis erupted in 2010 and has to be completed by the end of the year, before the deposit bail-in instrument becomes effective at the beginning of 2016.

According to the draft bill, the lenders will be able to use common or preferred shares, as well as other financing instruments to be bailed in.

Greece needs to recapitalize its banks by year end: Dombrovskis

Tue Oct 27, 2015 5:53am EDT

ATHENS

Reurers

reece needs to have its biggest lenders recapitalized by the end of the year, EU Commission Vice-President Valdis Dombrovskis said on Tuesday.

"We all agree to finalize bank recapitalization by end of this year," Dombrovskis said after meeting Greece's central bank governor Yannis Stournaras.

Dombrovskis is in Athens for talks on reforms Greece needs to complete before a review which would unlock new aid for the country under an 86 billion euro bailout.

Greece seeks lower bank capital target to help plug country's funding gap

BY GEORGE GEORGIOPOULOS AND LEFTERIS PAPADIMAS

ATHENS Tue Jan 21, 2014 2:06pm GMT

(Reuters) - Greece wants its international lenders to agree to a lower capital ratio for its big banks so there is money left over in its bank rescue fund to help to plug the country's funding gap, bankers said on Tuesday.

Greece is in talks with the International Monetary Fund, the European Commission and the European Central Bank, the so-called "troika" of international lenders, to cut the amount of capital the country's four main banks have to set aside to cover potential loan losses.

"There are talks between Greek authorities and the troika on whether the required capital adequacy ratio (known as Core Tier 1) can be reduced to 8 from 9 percent," a banker close to the discussions told Reuters, declining to be named.

EU argues over joint rescue plan for eurozone banks

BBC

11 December 2013 Last updated at 11:31 GMT

The EU is edging towards a common mechanism for rescuing problem banks, in a drive to avoid any repetition of taxpayer-funded bailouts.

EU finance ministers finished marathon talks early on Wednesday - but they will try again next week to reach a deal on the eve of an EU summit.

Bank failures triggered the eurozone financial crises that struck the Republic of Ireland, Spain and Cyprus.

The new rescue blueprint would involve transferring powers to a new EU agency.

There are arguments over the future scope of that agency's powers - and the plan still has to be agreed with the European Parliament.

Greece's Eurobank announces 2 billion euro share issue

ATHENS Thu Nov 14, 2013 12:56pm EST

(Reuters) - Eurobank, Greece's No. 3 lender, said on Thursday it would sell 2 billion euros ($2.7 billion) worth of new shares at the end of the year as part of a plan to return to private ownership after a bailout in 2012.

UPDATE 2-Greece picks Eurobank to buy Postbank ahead of mid-July deadline

Sat Jul 13, 2013 7:29pm EDT

By George Georgiopoulos

(Reuters) - Greece's bank rescue fund picked Eurobank to buy New Hellenic Postbank as part of consolidation in the sector and to meet a condition for the next tranche of Greece's bailout, it said after a board meeting on Saturday.

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.

UPDATE 1-Deposits flew into Greek banks during Cypriot crisis

Wed Apr 10, 2013 5:21am EDT

(Adds details)

(Reuters) - Greek bank deposits rose by more than 1.5 billion euros in March despite fears Cyprus's banking crisis would trigger deposit outflows in other indebted euro zone economies, Greece's central bank chief said.

More than 19 billion euros have returned to Greece since mid-June last year when the election of a pro-bailout government allayed fears of a messy Greek exit from the euro zone.