National Bank of Greece on Tuesday confirmed the sale of 99.81 percent of its profit-making Turkish subsidiary, Finansbank, to Qatar National Bank for a price of 2.75 billion euros.
NBG group officials stressed that the transaction dramatically improves the bank’s capital adequacy indices and the group’s liquidity, as the deal also includes the repayment of Finansbank’s arrears of 910 million euros to NBG. Therefore, with the completion of the transaction, the liquidity of the the Greek lender will improve by over 3.5 billion euros.
On the other hand, criticism has been expressed regarding the price offered, as it is below the Turkish bank’s accounting value, as well as the fact that National is abandoning a profit-making subsidiary in a very dynamic market. Finansbank was bought in 2006 for $5.5 billion.
Finansbank’s sale was not solely National’s decision, but forms part of the broader commitments the country has made to European authorities. The European Commission had insisted on the sale, stressing that the recent recapitalization process was the third time National had received taxpayers’ money, which will now have to be secured.
Notably Finansbank’s sale will allow National to proceed rapidly to the repayment of the contingent convertible bonds (CoCos) issued in the context of the recapitalization.
National argues that after the transaction its Core Tier I index will soar to 19.6 percent, not including the CoCos, and that it will be able to repay most of the CoCos, to a total value of 2 billion euros, fetching annual benefits of 150 million euros.
Main opposition New Democracy reacted strongly to the sale. In a statement it noted that “the government’s conduct that led to the shutdown of the banks and the need for a new recapitalization have also imposed new restructuring plans on banks with the sale of their assets. The sale, at a very low price, of the subsidiary that contributed some 40 percent of the group’s profits, decreases Greece’s presence in Southeastern Europe and deals a blow to the country’s extrovert character.”