National Bank of Greece (ADR) (NYSE:NBG), the largest bank in the troubled economy, Greece made an announcement yesterday that it will sell the shares of Turkish Unit, Finansbank AS by April. The bank said that it anticipates the share tender to conclude in the upcoming weeks as it scales up its efforts to improve capital base. The stock of the bank was down by more than 4% following the news to $1.28.
In its press release, National Bank of Greece (ADR) (NYSE:NBG) said that it will sell 7.15 billion new shares along with 800 million existing shares in Finansbank through Istanbul stock exchange. The shares will be sold as a secondary public offering, which will bring down the bank’s stake in the unit to 73% from the current 99.8%.
It is noteworthy that National Bank of Greece (ADR) (NYSE:NBG) had first bought a stake in Finansbank in 2006, which denoted its efforts to expand into the regions of Southeast Europe. The bank had to put little effort as the Turkish bank became a money spinner for it. It was this Turkish unit that helped National Bank of Greece to sail through the country’s financial crisis as it accounted for nearly 40% of NBG’s revenue in the first half of 2014.
However, challenges in the form of a new addition to nonperforming loans over the last few weeks have forced National Bank of Greece (ADR) (NYSE:NBG) to take such a decision. Also, the bank is currently in urgent need to shore up its balance sheet. NBG anticipates raising nearly $1.06 billion through the stake sale. As per the restructuring plan that was approved by the European Commission, NBG might retain a 60% of its share in Finansbank. The decision to sell the share in Finansbank has been prevented by NBG for months as it did not wish to part away from the prized asset. But, the restructuring plan necessitated the Greek lender to sell its stake until the end of 2015.