Obbligazioni perpetue e subordinate Tutto quello che avreste sempre voluto sapere sulle obbligazioni perpetue... - Cap. 3
- Creatore Discussione Joe Silver
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Cat XL
Shizuka Minamoto
Complimenti...gran bella banca
Joe Silver
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Lo dici in senso ironico o la ritieni davvero una buona banca?
Eurobank Ergasias redeems state preference shares with Tier 2 subordinated notes, increasing its funding costs
Last Friday, Eurobank Ergasias S.A. (Caa3 stable, caa22 ), announced that it had redeemed its €950 million preference shares subscribed by the Government of Greece (Caa2 positive) with €950 million of Tier 2 subordinated notes that will carry an annual coupon of 6.4%. This instrument swap is in accordance with recently passed legislation (Law 4484/2017) that allows Greek banks with state preference shares to replace them with Tier 2 bonds and forego the need to repay them in cash. However, the Tier 2 bonds will increase the bank’s funding costs, while the redemption of the preference shares will also reduce its phase-in common equity Tier 1 (CET1) ratio by around 250 basis points, all credit negatives. The Tier 2 bonds’ 6.4% coupon will increase the bank’s funding cost by around €60 million before tax. The extra funding cost will be a significant burden on the bank, which reported profit before tax of €103.6 million the first six months of 2017 and €226.4 million in 2016. In contrast, the state preference shares did not carry any additional cost for Eurobank, since the capital instrument was non-cumulative and had a coupon of 10% subject to meeting minimum capital adequacy requirements set by Bank of Greece and the availability of distributable reserves. Given that the bank had no distributable reserves because of accumulated losses and has not paid a dividend to ordinary shareholders since the issuance of these preference shares in May 2009, it benefitted from this source of state funding at zero cost. According to the Basel III capital requirements, Eurobank’s state preference shares are not eligible for recognition as CET1 capital starting in January 2018. Accordingly, and regardless of the redemption of these preference shares with Tier 2 bonds, we estimate that the bank’s pro forma phased-in CET1 capital ratio will decline significantly to around 14.9% from 17.4% as of June 2017. The substitution of the state preference shares with Tier 2 bonds will at least ensure that Eurobank’s phased-in total capital adequacy ratio will remain at our estimate of around 17.7% as of June 2017 (see exhibit). The new Tier 2 bonds will have a 10- year maturity, be callable after five years, and are classified as subordinated instruments ranking senior to common shares. In addition, these Tier 2 notes are non-convertible and qualify as a minimum requirement for own funds and eligible liabilities instrument.
Concurrently, the bank has a relatively weak quality of capital given its proportionally high amount of deferred tax assets (DTAs) eligible as CET1 capital that total around €4 billion, which account for around 70% of its total CET1 capital, excluding state preference shares. These DTAs, which are eligible to be converted into deferred tax credits if certain conditions are met, are lower quality capital in view of Greece’s weak credit standing, which casts doubt on the government’s ability to meet such sizable DTAs. The bank’s relatively weak tangible common equity, excluding eligible DTAs, provides a thin loss-absorption cushion for creditors in the context of significantly high nonperforming exposures of around 44.1% of the bank’s gross loans as of June 2017.
Last Friday, Eurobank Ergasias S.A. (Caa3 stable, caa22 ), announced that it had redeemed its €950 million preference shares subscribed by the Government of Greece (Caa2 positive) with €950 million of Tier 2 subordinated notes that will carry an annual coupon of 6.4%. This instrument swap is in accordance with recently passed legislation (Law 4484/2017) that allows Greek banks with state preference shares to replace them with Tier 2 bonds and forego the need to repay them in cash. However, the Tier 2 bonds will increase the bank’s funding costs, while the redemption of the preference shares will also reduce its phase-in common equity Tier 1 (CET1) ratio by around 250 basis points, all credit negatives. The Tier 2 bonds’ 6.4% coupon will increase the bank’s funding cost by around €60 million before tax. The extra funding cost will be a significant burden on the bank, which reported profit before tax of €103.6 million the first six months of 2017 and €226.4 million in 2016. In contrast, the state preference shares did not carry any additional cost for Eurobank, since the capital instrument was non-cumulative and had a coupon of 10% subject to meeting minimum capital adequacy requirements set by Bank of Greece and the availability of distributable reserves. Given that the bank had no distributable reserves because of accumulated losses and has not paid a dividend to ordinary shareholders since the issuance of these preference shares in May 2009, it benefitted from this source of state funding at zero cost. According to the Basel III capital requirements, Eurobank’s state preference shares are not eligible for recognition as CET1 capital starting in January 2018. Accordingly, and regardless of the redemption of these preference shares with Tier 2 bonds, we estimate that the bank’s pro forma phased-in CET1 capital ratio will decline significantly to around 14.9% from 17.4% as of June 2017. The substitution of the state preference shares with Tier 2 bonds will at least ensure that Eurobank’s phased-in total capital adequacy ratio will remain at our estimate of around 17.7% as of June 2017 (see exhibit). The new Tier 2 bonds will have a 10- year maturity, be callable after five years, and are classified as subordinated instruments ranking senior to common shares. In addition, these Tier 2 notes are non-convertible and qualify as a minimum requirement for own funds and eligible liabilities instrument.
Concurrently, the bank has a relatively weak quality of capital given its proportionally high amount of deferred tax assets (DTAs) eligible as CET1 capital that total around €4 billion, which account for around 70% of its total CET1 capital, excluding state preference shares. These DTAs, which are eligible to be converted into deferred tax credits if certain conditions are met, are lower quality capital in view of Greece’s weak credit standing, which casts doubt on the government’s ability to meet such sizable DTAs. The bank’s relatively weak tangible common equity, excluding eligible DTAs, provides a thin loss-absorption cushion for creditors in the context of significantly high nonperforming exposures of around 44.1% of the bank’s gross loans as of June 2017.
Fabrib
Forumer storico
Cat XL
Shizuka Minamoto
Decisamente la prima...
Joe Silver
Forumer storico
Lo sospettavo...
mariarosa78
Forumer attivo
XS1694763142 banca popolare dell'alto adige...........qualcuno ha notizie?
Joe Silver
Forumer storico
Banca piccolina. L'avevo presa in emissione e mollata subito con modestissimo gain Ma pur sempre gain).
Mi permetto di farmi un po' gli affari tuoi dopo aver letto il tuo scambio con Fabrizio su Astaldi che dici aver avuto in grossa quantiyà. Mi sembra di capire che puoi disporre di un patrimonio molto robusto ed allora ti chiedo, se non ti offendi: ma val la pena di andare massicciamente su titoli così debolucci? Magari un lotto si può pure prendere, però se i soldi non ti mancano e riesci tranquillamente a metter insieme il pranzo con la cena (e pure il dessert) non è più comodo accontentarsi di una cedola magra ma sicura?
...o che forse ti piace il rischio?
Scusa il discorso seniserio da vecchio prudentino ed un cordialissimo saluto
Joe Silver
Forumer storico
Prontamente venduta (come da tuo implicito invito) ed anche con piccolo guadagno (pizza, birra e caffè)
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