Amount of funds raised yesterday National Bank through senior bond issue (senior preferred), which, as announced by the bank, ended with a coupon of 7.25% and a yield of 7.5%.

The interest rate reflects current market conditions, which have worsened since the onset of the geopolitical crisis and resulted in higher borrowing costs compared to last year. The deal was described as a success because, according to the bank, it “generated investor interest, raising more than €1.1 billion in bids involving more than 100 institutional investors. 60% of the issue amount was allocated to foreign institutional investors.” According to the NBG, “the success of the project is the result of demand marked by a broad investor base and is a practical confirmation of the confidence in the National Bank and the prospects for the Greek economy.”

The bond has a term of five years and is callable after four years, and the issuance is part of a tightening of the Minimum Equity and Eligible Liabilities Requirement, the so-called MREL, which constitutes a supervisory obligation. this was introduced by the SRB (Single Resolution Board) and applies to all European banks.

The interest rate reflects market conditions that have worsened since the onset of the geopolitical crisis.

For Greek banks, the deadline for reaching the MREL targets has been moved to the end of 2025 – 2023 for European banks – with an interim target of January 2022. The total amount of funds that Greek banks will need to raise by the end of 2025 is estimated at 10 -12 billion euros depending on the amount of their risk-weighted assets (RWA), i.e. the risks they have taken on based on loans to businesses and households.

For the National Bank, according to its publication, the interim target set for January 2022 is 18.04% of weighted assets, which currently amount to 35.1 billion euros, and was exceeded by the bank, which has a corresponding indicator of 19.30% by based on data for 9 months. The end-2025 target is set at 26.79% RWA.

BofA Securities, Goldman Sachs Bank Europe SE, IMI Intesa Sanpaolo, Nomura and UBS acted as joint bookrunners, while Allen & Overy and law firm Karatzas & Associates acted as legal advisors to NBG. It should be noted that the National Bank, which has the highest capital ratios (15.2% CET1 and 16.3% CAD after full implementation of IFRS 9) among the four systemically important banks, has not exited in the last two years. The last similar issue was in October 2020, through which the bank raised 500 million euros at an interest rate of 2.75%, which, based on today’s conditions, is estimated at about 7.5%, which is approximately the same as the interest rate of yesterday’s issue.