The Hellenic Financial Stability Fund (HFSF) announces the issuance of its interim financial statements, for the nine month period ended September 30th, 2014.
The main points of the financial statements, during the above-mentioned period, are:
I. The Fund’s financial performance
Interest income: During the 9 month period ended September 30th
, 2014 interest income
amounted to € 58.6m versus € 148.6m in the respective period in 2013. The decrease in
interest income versus 2013 is due to the decrease of the outstanding amount of European
Financial Stability Facility (EFSF) bonds held by the Fund after the completion of the systemic
banks’ recapitalization in the end of June 2013.
Personnel expenses: During the 9 month period ended September 30th
, 2014 personnel expenses amounted to € 2m versus € 1.8m during the same period in 2013. In September 30th, 2014 the Fund’s personnel amounted to 33, whereas in September 30
th, 2013 it amounted to 22.
General administrative and other operating expenses: During the 9 month period ended
September 30th , 2014 operating expenses amounted to € 16.7m versus € 10.3m in the
respective period in 2013. The main reason for the increase in operating expenses were
the fees for the fairness opinions rendered by investment banks, in compliance with the
legal requirement as per the latest amendment of the law in April 2014, for the systemic
banks’ share capital increases, which amounted to € 6.6m.
Cash and balances with Central Bank: As of September 30th
, 2014 cash and deposits in Bank of Greece stood at € 625.3m versus € 488.7m as of December 31st, 2013.
Investment securities: As of September 30th
, 2014 the portfolio of the EFSF bonds remained
unchanged from December 31st, 2013 at € 10,932.9m in nominal terms.
Financial assets at fair value through profit or loss: As of September 30th, 2014 the market value of the Fund’s equity portfolio of the four systemic banks’ amounted to € 17.0bn versus€ 22.5bn as of December 31st, 2013. This has further declined to € 13bn in December 10th,2014, due to the continuing market volatility of the Athens stock exchange.
Receivables from banks under liquidation: During the 9 month period ended in September
30th, 2014 the Fund collected via the liquidation process a total amount of € 40m in cash. The estimated recoverable amount of the funding gap, which has been covered by the Fund instead of the HDIGF, amounted to € 2,792m as of September 30th, 2014 versus € 2,853m as of December 31st, 2013. During the 9 month period of 2014 the Fund recognized in the P&L statement an impairment loss of € 34.3m.
II. Systemic Banks’ overview
i) EBA/SSM Comprehensive Assessment : AQR and Stress Test Results
In October 26th, 2014 the ECB and the EBA announced the results of the Comprehensive
Assessment. This exercise comprised both an Asset Quality Review (AQR) and a Stress
Test in which the capital adequacy of banks under review was tested under different
stress scenarios, and measured against minimum threshold levels in each scenario. Under
the static balance sheet – adverse scenario – assumption, the aggregate capital shortfall
for the Greek Banks amounted to € 8.7bn (Alpha: € 0bn, Eurobank € 4.7bn, NBG € 3.4bn,
and Piraeus € 0.7bn). However, taking into account the effect of net capital raising
actions that took place in 2014 the remaining aggregate capital shortfall amounted to
approximately € 2.7bn (Piraeus: € 0bn, Eurobank € 1.76bn, and NBG € 0.93bn). Greek
banks were also assessed under the dynamic balance sheet assumption (taking into
account the restructuring plans that were approved by DG-COMP after January 1
st, 2014), resulting into NBG having no shortfall and Eurobank with practically no shortfall.
ii) Deferred Tax Asset Scheme
A law (L. 4303/2014, Government Gazette 231/17.10.2014) was voted by the Greek
Parliament amending article 27A of law 4172/2013. Article 27A deals with the voluntary
conversion of the deferred tax assets (DTA) on temporary differences, deriving from PSI
and allowances for loan losses, to a definitive and cleared tax credit (DTC) against the
Greek State. DTCs held by the banks give rise to a direct refund right from the State.
Alpha, Eurobank, and NBG held General Meetings in November 7th, 2014 in order to
approve the banks’ participation in the DTA Scheme and the Fund granted its approval.
An EGM of Piraeus is scheduled in December 19th, 2014 to approve the bank’s participation in the DTA scheme.
Alpha Bank
In June 2014 HFSF had provided Alpha with its consent to acquire Citibank’s Greek Retail
Banking business as well as Diners Club of Greece, together with the associated receivables,
assets under management, deposits, customer relationships as well as branches, employees
and infrastructure. The acquisition was completed by the end of September.
Alpha, with the consent of HFSF, launched in September a Voluntary Separation Scheme
(VSS). A total number of 2,200 employees participated in the VSS. As a result of that Alpha
will have an annual cost saving of approximately € 120m while the one-off cost of the VSS is
approximately € 195m.
Eurobank
In the context of the Law 3864/2010, HFSF announced on April 4th, 2014 that it would enter
into a new Relationship Framework Agreement (RFA) with Eurobank, in the event that
private sector participation exceeded 50% of the share capital increase of Eurobank that
took place in April 2014. The new RFA between Eurobank and the HFSF was signed in August
2014.
National Bank of Greece
In September 2014 HFSF provided its consent to NBG in order for Finansbank to proceed
with a Share Capital Increase (SCI) without pre-emption rights of existing shareholders, by
means of a public offering. Based on the restructuring plan NBG is required to reduce its
shareholding in Finansbank so that its share ownership represents no more than 60% by the
end of 2015. In November 2014 NBG, following HFSF’s approval, announced that it will also
proceed with a secondary offering of existing shares in Finansbank corresponding to
approximately 2.25% of the paid-in capital of Finansbank post the SCI and with the granting
of an overallotment option. The total stake offered through the SCI, the secondary offering
and the overallotment option will not exceed 26.9%.
In September 2014 NBG announced the signing of the Sale and Purchase Agreement for Astir
Palace Vouliagmeni S.A., between the Hellenic Republic Asset Development Fund S.A.
(HRADF) in their capacity as sellers, Apollo Investment HoldCo in its capacity as the buyer,
and Jermyn Street Real Estate Fund IV L.P. in its capacity as guarantor.
In October 2014 NBG announced the results of the mandatory tender offer for the
acquisition of the total common registered shares of MIG REIC, which was approved by the
HFSF. Following completion of the transfer of the tendered shares, NBG Pangaea REIC holds
13,605,064 shares in aggregate, representing approximately 96.67% of the total paid-up
share capital and voting rights of MIG REIC.
In October 2014 NBG announced the acquisition of 5% of the voting common shares of
Finansbank from International Finance Corporation (IFC), upon exercise of IFC’s relevant
right (put option) and in accordance with the agreement between them of March 29th
, 2007. NBG paid a total consideration of $ 343m bringing NBG’s stake to 99.81%.
Piraeus Bank
In July 2014 Piraeus’ second warrants exercise took place. There were 4,951,260 warrants
exercised and 22,160,707 actual shares exchanged, with the Fund receiving € 39m. Following
the exercise the HFSF shareholding in Piraeus bank declined from 67.3% to 66.9%.
In August 14th 2014, Piraeus announced the sale of 100% of ATE Insurance to ERGO
Insurance Group, a subsidiary of Munich Re for a total consideration of € 90m subject to
customary net asset value adjustments upon closing. The transaction is subject to regulatory
approvals and envisaged to be completed by the end of 2014.
In October 2014 the HFSF voted in favor of Piraeus merger by acquisition with Geniki Bank
and the completion of the transaction with the signing of the merger agreement. HFSF also
voted in favor of the cancelation of the € 750m Greek state preference shares of Law
3723/2008 following their full repayment in May 2014, along with the corresponding
reduction of the share capital. Both actions were approved by Piraeus EGM in October 30th
,2014.