Alpha Bank, EFG report 9-month loss

Alpha and Eurobank reported nine-month losses on Monday due to impairments from a bond swap agreed in July and said they would adjust their capital raising plans after a new debt exchange plan is finalised.
The two lenders have agreed to merge to form one of the largest banks in southeast Europe.
Greek banks are trying to cope with rising bad debt provisions and a shrinking deposit base as the austerity-hit country struggles through its fourth straight year of economic contraction.
Eurobank, the No.2 bank in Greece, reported a profit of 13 mln euros in the third quarter, above an average forecast of 2.2 mln euros by analysts. But after taking into account the impact of a July debt swap it lost 575 mln in the nine months of 2011.
Alpha, the No. 3 bank in the country, reported net income of 41.6 mln euros in the nine-month period. But after taking into account impairments on its government bond portfolio of 608.1 mln euros, it had a net loss of 566.7 mln euros.
The banks are expected to have to recapitalise after writedowns resulting from a planned bond swap agreed in October, which calls for a 50% nominal haircut on government bonds. Provisions for loan impairments are also expected to force them to shore up their capital base.
The so-called private sector involvement (PSI), the terms of which have not yet been finalised, will succeed the July 21 scheme that included a 21% net present value loss on the bonds.
The banks' tie-up will include plans to boost their equity base by 3.9 bln euros through internal capital generation, a 1.25 bln euro rights issue and a 500 mln issue of convertible notes.
"The capital plan will be updated once there is better visibility on the final terms and impact of the new PSI," Eurobank's Deputy CEO Nick Karamouzis told analysts in a conference call.
"Our primary objective is to preserve the private ownership of the bank," he said.
With liquidity getting tighter Greek banks have been migrating from ECB funding to the Bank of Greece's emergency funding (ELA) facility.
Karamouzis said he expects banks to make more use of ELA funding where they are charged a more expensive interest rate of 3.25% and which is accessed through government guarantees.