EBRD invests in covered bond issued by National Bank of Greece

By Axel  Reiserer

EBRD invests in covered bond issued by National Bank of Greece

Strong international interest signals growing confidence in country’s recovery

The EBRD has successfully participated in a covered bond issue by National Bank of Greece S.A. (NBG) with an investment of €30 million out of the total €750 million offering. The landmark transaction will support the bank’s goal to re-establish a recurring presence on the international capital markets.

This in turn will benefit the real economy, as raising new funds will allow NBG to provide mortgage lending and support the real estate market, a fundamental pillar for the recovery of the economy.

NBG, one of the four Greek systemic banks, is the country’s oldest lender having been established in 1841. The bank has a total asset base of €70 billion as of the end of June 2017 and its shares are listed on the Athens Stock Exchange.

Covered bonds are a popular funding tool in Europe, backed by assets on the issuing bank’s balance sheet and viewed as low-risk investments. The successful bond issuance will accelerate NBG’s disengagement from the ECB Emergency Liquidity Assistance, normalising its funding profile.

The transaction is the second publicly placed Greek covered bond since NBG’s 2009 issuance and the first capital market transaction for a Greek bank since 2014. The strong interest in the issuance by international investors signals growing confidence in the country’s banking sector and economic recovery.

Lucyna Stańczak-Wuczyńska, EBRD Director for EU Banks in the Financial Institutions group, said: “We are very pleased for National Bank of Greece and the success of its issuance, and very proud as the EBRD to be part of it. This sends a strong signal to foreign and domestic investors that after many tough years the outlook for Greece has changed remarkably – for the better. The high demand shows us that appetite has returned, and this is good news for Greece and a reward for some painful adjustments.”

Vassilis Kavalos, Group Treasurer of National Bank of Greece, commented: “NBG aimed to re-establish itself in international capital markets, expand its investor base and diversify its funding sources. The EBRD’s support was crucial for us and helped us achieve the best possible outcome. The final demand far exceeded our expectations and we were positively surprised by the diversified pool of investors, with 85 per cent of the deal being allocated to foreign investors. The success of our transaction has identified a sizable untapped demand for Greek secured assets, which will certainly support future efforts by Greek banks to further increase market funding.”

The EBRD started investing in Greece on a temporary basis in 2015 to support the country’s economic recovery. The Bank’s priorities are to strengthen private companies and the financial sector, and to support privatisation, infrastructure development and regional integration of the Greek economy. Since the beginning of its operations, the Bank has invested over €1.1 billion in more than 20 projects in the country.