11122017Headline:

Moody’s: National Bank to fully repay ELA funds in next two months

The sale of National Bank’s subsidiaries in Serbia is credit positive for the bank, Moody’s said on Thursday.

In a credit outlook report, Moody’s said that the sale of National Bank’s subsidiaries in Serbia last week, along with a corporate loan portfolio, to OTP Banka Srbija a.d. Novi Sad, was credit positive for the Greek bank as it will strengthen its liquidity by around 270 million euros, allowing the bank to lower its emergency borrowing from the ELA mechanism, while at the same time it will boost the bank’s Common Equity Tier 1 (CET1) by around 44 basis points.

Moody’s said National Bank will use the biggest part of its revenues from the sale to further reduce its expensive borrowing from ELA, totaling around 1.0 billion euros or 1.5 pct of National Bank’s total assets at the end of October. The credit rating agency expect National Bank to be the first Greek bank to fully repay its borrowing from ELA in the next two months, helped by the sale of the remaining assets -not related with its core assets and increased deposits amid a moderate economic recovery in 2017-2018.

Moody’s said National Bank has significantly lowered its borrowing from the European Central Bank and ELA in the last two years and noted that this development is lowering funding costs, improving profit margins and help the bank in its effort to return to sustainable profitability. It underlined, however, that reducing a large stock of non-performing exposure was a main challenge for National Bank as well as the other Greek banks.