National Bank of Greece approves 1 bln eur pref. share issue

Shareholders of Greece's largest lender National Bank approved a capital boost of up to 1 bln euros ($1.30 bln) through a sale of new preferred shares to the state, an official at the bank said on Thursday.
National (NBG) is raising the funds as a shield against the impact of an expected deal under which private sector bondholders will accept a 50% discount on the nominal value of their holdings of Greek government bonds. NBG has one of the biggest private holdings of Greek debt.
The bank raised the money under the terms of a bank support law passed in 2008 to help lenders raise liquidity during the global credit crisis.
Shareholders of Piraeus Bank, Greece's fourth-biggest bank, will decide on Friday whether to use the same legislation to raise 400 million euros.
Greek banks also have to cope with rising bad debts and a shrinking deposit base as the austerity-hit country struggles through its fourth straight year of economic contraction, seen topping 5.5% this year.
NBG's preferred, non-voting, shares would be sold to the state at 5 euros apiece and pay a 10% dividend. The company's common stock was trading at 1.59 euros at the Athens bourse at 1241 GMT.
NBG had only tapped 350 mln euros under the 2008 scheme, out of a total of 1.35 bln it had been allocated. If it raises the full 1 bln euros, its core Tier 1 capital ratio will improve to 11% from 9.5% at end-September.