National Bank of Greece’s series A preference shares to be converted into common shares

By Wendy Van Sickle

Columbus, Ohio, Dec. 8 – National Bank of Greece SA’s 12,639,831 outstanding non-cumulative preference shares, series A, will be converted into newly issued common shares at a rate of 23.631723 new shares for each preference share. The preference shares have a $25 liquidation preference.

The securities are subject to the mandatory conversion under Hellenic Financial Stability Fund law, so that their holders will share the burden of the issuer’s capital shortfall, according to a 6-K filed with the Securities and Exchange Commission.

The issuer made a formal request on Thursday for state aid to allow it to make up capital shortfall it is required to remedy by Dec. 11.

The deadline was set on Oct. 31, when the European Central Bank published the results of its comprehensive assessment of National Bank of Greece, which indicated a capital shortfall relating to the baseline scenario and the adverse scenario of the stress tests carried out.

The issuer has taken number of steps to cover the shortfall by generating common equity Tier 1 capital and strengthening its capital position, but some residual shortfall remains, according to the 6-K.

Under European Union law, if state aid is required to allow a bank to meet any relevant capital shortfall, burden sharing must be achieved by contributions of holders of equity, hybrid capital and subordinated debt to reduce the capital shortfall as much as possible.

The series A preference shares are treated as Tier 1 capital instruments under Greek law, making them subject to the mandatory conversion, according to the filing.

National Bank of Greece is an Athens-based bank.

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