NAT. BANK OF GREECE SA
Announcement
This release is not an offer of securities for sale in the United States or elsewhere. Neither the shares of the National Bank of Greece S.A. nor the rights to acquire the same have been or will be registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration. There will be no public offering of the rights or the shares in the United States.
This release is made pursuant to Laws 3340/2005, 3556/2007, the decision of the Capital Market Commission 3/347/12.7.2005 and the Rule Book of the Athens Exchange. This release and the information contained herein do not constitute and should not be construed as constituting a public offer or solicitation of any offer to buy or subscribe for new shares that the Company is proposing to issue pursuant to its share capital increase or an invitation or solicitation to make offers to purchase or subscribe such shares, as contemplated in Greek Law 3401/2005. Any investment decision to purchase, subscribe or otherwise invest or sell any such Company?s shares should be based exclusively on the information that will be contained in the Company?s Prospectus that will be prepared in connection with the offering and the admission of the Company?s shares to trading on the Athens Exchange, after it has been approved by the Capital Market Commission and published in accordance with Greek Law 3401/2005.
This release is directed in the United Kingdom solely at persons who (i) have professional experience in matters relating to investments and who fall within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or (ii) are high net worth entities and other persons to whom such communication may otherwise lawfully be made falling within Article 49(2)(A) to (D) (all such persons together being referred to as Relevant Persons). This release must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this release relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Persons distributing this release must satisfy themselves that it is lawful to do so.
Credit Suisse Securities (Europe) Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International plc, Citi, and UBS Limited, each of which is regulated and authorised in the United Kingdom by the FSA, are each acting for NationalBank of Greece S.A and for no-one else in connection with the Rights Issue and will not be responsible to anyone other than National Bank of GreeceS.A for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue, the contents of this announcement and or any matters or arrangements referred to herein or therein
This release contains certain forward-looking statements. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. National Bank of Greece S.A disclaims any obligation to update any forward-looking statements contained herein, except as required pursuant to applicable law.
16 June 2009
National Bank of Greece S.A. ("NBG", the "Bank" or the "Group") proposes a Rights Issue
Announcement Highlights
The management of NBG proposes a Rights Issue of up to euro 1.25 billion. The proposed subscription price is euro 11.30 per share and the proposed subscription ratio is 2 new shares for every 9 shares held by existing shareholders. A meeting of the Board of Directors has been convened for 18 June 2009 to approve the transaction and its terms.
The Rights Issue is a proactive response to provide capital flexibility ahead of other expected capital raisings in the banking sector and to reflect heightened investor expectations regarding capital adequacy levels in anticipation of tighter regulatory regimes worldwide. The capital raising is also a measure of prudence in view of the high level of uncertainty surrounding global economic conditions. In addition, this capital increase positions NBG for future business opportunities consistent with our strategy to strengthen our leading franchise in SE Europe.
As previously reported at our Q1 results announcement on 29 May 2009, despite the challenging environment, the loan book of NBG continues to grow at a steady pace and remains healthy allowing the Group to continue reporting strong profitability.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International will act as Joint Global Co-ordinators and Joint Bookrunners for the deal. JPMorgan and Morgan Stanley & Co. International will also act as Joint Bookrunners. The Rights Issue will be fully underwritten by the above banks. Timetable and details on subscription to the Rights Issue will be made available on NBG?s website (http://www.nbg.gr/) after the Board meeting.
Mr. Takis Arapoglou, Chairman of the Board and CEO, said "The new economic environment requires banks to be vigilant and take strategic initiatives in order to operate with a stronger capital base. The bank that achieves these higher standards early will have a comparative advantage and enhanced strategic flexibility. To this end, NBG is moving decisively to raise core equity capital, consistent with its traditional position as a leading regional bank. We wish to see all of our existing shareholders taking part in the Rights Issue."
Announcement Details
1. Recent Group Financial Performance NBG's robust operating performance was maintained in Q1 2009 despite the challenging environment. The sound financial performance reflects all four tenets of our strategy.
First, the sustainability of the Group's earning power was demonstrated yet again in the first quarter with attributable profit after tax of euro 317 million. Pre-provision earnings reached ?662 million, up 9% over Q1 2008, representing 407 basis points over average net loans. Operating expenses were down 14% from Q4 2008 resulting in a cost/income ratio of 46% for the quarter.
Second, our conservative stance towards risk management is evidenced by the Group's diversified portfolio and focus on secured credit. Non-performing loans stood at 3.7% of the total book at the end of Q1 2009. Charge-offs of euro 235 million provided for a cost of risk of 144 basis points on an annualized basis and coverage above 70%. The effect of the continuing deterioration of global macroeconomic conditions on the regions in which we operate will lead to additional non-performing loan generation during the second quarter and for the remainder of 2009. The Group however does not anticipate, based on experience in April and May, that provisioning levels in Q2 will be substantially different from Q1.
Third, the Group has a very strong liquidity profile. Market share in domestic savings accounts stood at 33% at the end of Q1 2009. We added ?1.1 billion of deposits in the first quarter (14% growth from Q1 2008) in Greece and 1.1 billion of Turkish Lira deposits (25% growth from Q1 2008) in Turkey. Customer deposits constitute 71% of the Group?s total funding pool with a loans to deposits ratio of 95%. Furthermore, there is an additional untapped liquidity pool in excess of euro 13 billion.
Fourth, our proactive approach to capital management is demonstrated by the strength of the Group's capital ratios. High profitability boosted the Group's Equity Tier 1 capital by 50 basis points to 8.3% at the end of Q1 2009 compared with year end 2008. As of 31 March 2009, Tier 1 capital stood at 10.4% on a pro forma basis to reflect the euro 350 million of preference shares issued to the Greek state in May 2009 and the private placement of Treasury shares concluded in April 2009.
In line with our proactive approach to capital management, we may consider a tender offer for all or part of our five outstanding Hybrid Tier 1 securities, issued by NBG Funding Ltd.
2. Rationale for the Rights Issue
NBG's strategy is to be a leading bank in the wider SE Europe region. We believe our success so far is the result of our measured organic expansion, combined with carefully considered strategic acquisitions, notably that of Finansbank. Our focus has been on high-growth countries of the region with traditional ties to Greece, supported by their European orientation. Moreover, the current environment brings out the benefits of NBG's historically conservative approach on risk management and continued efforts on cost containment. Combined with its inherent advantages of both strong liquidity and capital position, NBG has a powerful platform to implement its vision as the economic environment improves.
The proposed Rights Issue is being undertaken:
- To provide capital structure flexibility ahead of other expected capital raisings in the banking sector and to reflect heightened investor expectations regarding capital adequacy levels in anticipation of tighter regulatory regimes worldwide
- To enhance strategic flexibility. The Rights Issue will strongly position us for future business opportunities consistent with our strategy to strengthen our leading franchise in SE Europe.
The Rights Issue is not reflective of a deterioration in our business. Pre-provisioning profitability as demonstrated in Q1 remained robust despite the challenging operating environment while asset quality remains satisfactory in light of the current economic environment.
3. Rights Issue impact on capital adequacy ratios
Adjusting for the proposed Rights Issue of up to euro 1.25 billion, the pro-forma Equity Tier 1 Ratio and Tier 1 Ratios as at 31 March 2009 would have been approximately 10.1% and 12.3%, respectively. These ratios incorporate our participation in the Government's preference share scheme and the private placement of treasury shares that took place after the quarter-end.
4. Dividends s previously announced, while we continue to participate in the Government Support Scheme (GSS), dividends will be subject to a maximum of 35% of the parent bank?s distributable profits. Any decision regarding the distribution of any dividends may be vetoed by the representative of the Hellenic Republic who has been appointed to our board of directors. Dividend payments for our preference shares (including those issued under the GSS) will take preference over distributable profits available to our ordinary shareholders.
5. Principal terms of the Rights Issue NBG proposes a right issue with the issue of approximately 110.4 million ordinary shares, with nominal value of euro 5 each with pre-emptive rights for existing shareholders, at a subscription ratio of 2 new shares for every 9 shares held by existing shareholders. The proposed offer price for the new shares is euro 11.30 per share and the total proceeds would be approximately euro 1,25 billion. The Board will convene on Thursday 18th June in order to approve the rights issue and its terms.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International are acting as Joint Global Co-ordinators and Joint Bookrunners for the Rights Issue. JPMorgan and Morgan Stanley & Co. International will also act as Joint Bookrunners.
The Rights Issue will be fully underwritten by a syndicate of banks which will also include Citi and UBS limited in the role of Co-Lead Managers. NBG International will also act as a Co-Lead Manager. The Rights Issue is subject to the approval by the Board of Directors of the Bank which has been authorised by the General Meeting of Shareholders of 15/5/2008. The Prospectus will be submitted for approval to the Hellenic Capital Market Commission (HCMC).
6. Expected Timetable
The transaction is expected to close in late July subject to all necessary regulatory approvals.
A more detailed timetable for the transaction will be published within the Prospectus following approval from the HCMC.
This release is made pursuant to Laws 3340/2005, 3556/2007, the decision of the Capital Market Commission 3/347/12.7.2005 and the Rule Book of the Athens Exchange. This release and the information contained herein do not constitute and should not be construed as constituting a public offer or solicitation of any offer to buy or subscribe for new shares that the Company is proposing to issue pursuant to its share capital increase or an invitation or solicitation to make offers to purchase or subscribe such shares, as contemplated in Greek Law 3401/2005. Any investment decision to purchase, subscribe or otherwise invest or sell any such Company?s shares should be based exclusively on the information that will be contained in the Company?s Prospectus that will be prepared in connection with the offering and the admission of the Company?s shares to trading on the Athens Exchange, after it has been approved by the Capital Market Commission and published in accordance with Greek Law 3401/2005.
This release is directed in the United Kingdom solely at persons who (i) have professional experience in matters relating to investments and who fall within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or (ii) are high net worth entities and other persons to whom such communication may otherwise lawfully be made falling within Article 49(2)(A) to (D) (all such persons together being referred to as Relevant Persons). This release must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this release relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Persons distributing this release must satisfy themselves that it is lawful to do so.
Credit Suisse Securities (Europe) Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International plc, Citi, and UBS Limited, each of which is regulated and authorised in the United Kingdom by the FSA, are each acting for NationalBank of Greece S.A and for no-one else in connection with the Rights Issue and will not be responsible to anyone other than National Bank of GreeceS.A for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue, the contents of this announcement and or any matters or arrangements referred to herein or therein
This release contains certain forward-looking statements. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. National Bank of Greece S.A disclaims any obligation to update any forward-looking statements contained herein, except as required pursuant to applicable law.
16 June 2009
National Bank of Greece S.A. ("NBG", the "Bank" or the "Group") proposes a Rights Issue
Announcement Highlights
The management of NBG proposes a Rights Issue of up to euro 1.25 billion. The proposed subscription price is euro 11.30 per share and the proposed subscription ratio is 2 new shares for every 9 shares held by existing shareholders. A meeting of the Board of Directors has been convened for 18 June 2009 to approve the transaction and its terms.
The Rights Issue is a proactive response to provide capital flexibility ahead of other expected capital raisings in the banking sector and to reflect heightened investor expectations regarding capital adequacy levels in anticipation of tighter regulatory regimes worldwide. The capital raising is also a measure of prudence in view of the high level of uncertainty surrounding global economic conditions. In addition, this capital increase positions NBG for future business opportunities consistent with our strategy to strengthen our leading franchise in SE Europe.
As previously reported at our Q1 results announcement on 29 May 2009, despite the challenging environment, the loan book of NBG continues to grow at a steady pace and remains healthy allowing the Group to continue reporting strong profitability.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International will act as Joint Global Co-ordinators and Joint Bookrunners for the deal. JPMorgan and Morgan Stanley & Co. International will also act as Joint Bookrunners. The Rights Issue will be fully underwritten by the above banks. Timetable and details on subscription to the Rights Issue will be made available on NBG?s website (http://www.nbg.gr/) after the Board meeting.
Mr. Takis Arapoglou, Chairman of the Board and CEO, said "The new economic environment requires banks to be vigilant and take strategic initiatives in order to operate with a stronger capital base. The bank that achieves these higher standards early will have a comparative advantage and enhanced strategic flexibility. To this end, NBG is moving decisively to raise core equity capital, consistent with its traditional position as a leading regional bank. We wish to see all of our existing shareholders taking part in the Rights Issue."
Announcement Details
1. Recent Group Financial Performance NBG's robust operating performance was maintained in Q1 2009 despite the challenging environment. The sound financial performance reflects all four tenets of our strategy.
First, the sustainability of the Group's earning power was demonstrated yet again in the first quarter with attributable profit after tax of euro 317 million. Pre-provision earnings reached ?662 million, up 9% over Q1 2008, representing 407 basis points over average net loans. Operating expenses were down 14% from Q4 2008 resulting in a cost/income ratio of 46% for the quarter.
Second, our conservative stance towards risk management is evidenced by the Group's diversified portfolio and focus on secured credit. Non-performing loans stood at 3.7% of the total book at the end of Q1 2009. Charge-offs of euro 235 million provided for a cost of risk of 144 basis points on an annualized basis and coverage above 70%. The effect of the continuing deterioration of global macroeconomic conditions on the regions in which we operate will lead to additional non-performing loan generation during the second quarter and for the remainder of 2009. The Group however does not anticipate, based on experience in April and May, that provisioning levels in Q2 will be substantially different from Q1.
Third, the Group has a very strong liquidity profile. Market share in domestic savings accounts stood at 33% at the end of Q1 2009. We added ?1.1 billion of deposits in the first quarter (14% growth from Q1 2008) in Greece and 1.1 billion of Turkish Lira deposits (25% growth from Q1 2008) in Turkey. Customer deposits constitute 71% of the Group?s total funding pool with a loans to deposits ratio of 95%. Furthermore, there is an additional untapped liquidity pool in excess of euro 13 billion.
Fourth, our proactive approach to capital management is demonstrated by the strength of the Group's capital ratios. High profitability boosted the Group's Equity Tier 1 capital by 50 basis points to 8.3% at the end of Q1 2009 compared with year end 2008. As of 31 March 2009, Tier 1 capital stood at 10.4% on a pro forma basis to reflect the euro 350 million of preference shares issued to the Greek state in May 2009 and the private placement of Treasury shares concluded in April 2009.
In line with our proactive approach to capital management, we may consider a tender offer for all or part of our five outstanding Hybrid Tier 1 securities, issued by NBG Funding Ltd.
2. Rationale for the Rights Issue
NBG's strategy is to be a leading bank in the wider SE Europe region. We believe our success so far is the result of our measured organic expansion, combined with carefully considered strategic acquisitions, notably that of Finansbank. Our focus has been on high-growth countries of the region with traditional ties to Greece, supported by their European orientation. Moreover, the current environment brings out the benefits of NBG's historically conservative approach on risk management and continued efforts on cost containment. Combined with its inherent advantages of both strong liquidity and capital position, NBG has a powerful platform to implement its vision as the economic environment improves.
The proposed Rights Issue is being undertaken:
- To provide capital structure flexibility ahead of other expected capital raisings in the banking sector and to reflect heightened investor expectations regarding capital adequacy levels in anticipation of tighter regulatory regimes worldwide
- To enhance strategic flexibility. The Rights Issue will strongly position us for future business opportunities consistent with our strategy to strengthen our leading franchise in SE Europe.
The Rights Issue is not reflective of a deterioration in our business. Pre-provisioning profitability as demonstrated in Q1 remained robust despite the challenging operating environment while asset quality remains satisfactory in light of the current economic environment.
3. Rights Issue impact on capital adequacy ratios
Adjusting for the proposed Rights Issue of up to euro 1.25 billion, the pro-forma Equity Tier 1 Ratio and Tier 1 Ratios as at 31 March 2009 would have been approximately 10.1% and 12.3%, respectively. These ratios incorporate our participation in the Government's preference share scheme and the private placement of treasury shares that took place after the quarter-end.
4. Dividends s previously announced, while we continue to participate in the Government Support Scheme (GSS), dividends will be subject to a maximum of 35% of the parent bank?s distributable profits. Any decision regarding the distribution of any dividends may be vetoed by the representative of the Hellenic Republic who has been appointed to our board of directors. Dividend payments for our preference shares (including those issued under the GSS) will take preference over distributable profits available to our ordinary shareholders.
5. Principal terms of the Rights Issue NBG proposes a right issue with the issue of approximately 110.4 million ordinary shares, with nominal value of euro 5 each with pre-emptive rights for existing shareholders, at a subscription ratio of 2 new shares for every 9 shares held by existing shareholders. The proposed offer price for the new shares is euro 11.30 per share and the total proceeds would be approximately euro 1,25 billion. The Board will convene on Thursday 18th June in order to approve the rights issue and its terms.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International are acting as Joint Global Co-ordinators and Joint Bookrunners for the Rights Issue. JPMorgan and Morgan Stanley & Co. International will also act as Joint Bookrunners.
The Rights Issue will be fully underwritten by a syndicate of banks which will also include Citi and UBS limited in the role of Co-Lead Managers. NBG International will also act as a Co-Lead Manager. The Rights Issue is subject to the approval by the Board of Directors of the Bank which has been authorised by the General Meeting of Shareholders of 15/5/2008. The Prospectus will be submitted for approval to the Hellenic Capital Market Commission (HCMC).
6. Expected Timetable
The transaction is expected to close in late July subject to all necessary regulatory approvals.
A more detailed timetable for the transaction will be published within the Prospectus following approval from the HCMC.