Greece’s National Bank planning capital increase

National Bank <NBGr.AT>, Greece's largest lender, said on Tuesday it planned to raise 2.8 billion euros to boost its capital and better cope with debt and recession in its home country.

The plan includes a combined 631 million euro rights offer, the sale of convertible bonds worth 1.184 billion euros and the sale of a minority stake in its Turkish unit Finansbank.

NBG's board will convene on Sept. 10 to approve the plan.

"NBG is proactively fortifying its balance sheet as a prudent response to the macro-economic realities in our core market and enhancing our strategic options," NBG's Chief Executive Apostolos Tamvakakis said in a statement.

NBG passed a Europe-wide banks stress test in July. Still, like all other Greek banks, it has no access to the interbank market and relies on ECB funding.

The EU and International Monetary Fund have set aside 10 billion euros to support the Greek banks under a 110 billion euro bailout for the debt-laden country.

If the plan succeeds, NBG's Tier 1 capital ratio will rise to 14.6 percent and the bank will buy back 350 million euros of preference shares it sold to the Greek government as part of a bank support plan in 2008.

Finansbank is NBG's most lucrative unit. NBG reported a profit in the first half because Finansbank offset the battering the bank took from Greece's debt crisis.

Finansbank had a profit of 251 million euros in the first half while NBG reported net profit of 146 million euros in the same period.