Barrage of bond issues from the four systemic banks

By Leonidas Stergiou

Most of the market liquidity program for 2022 is expected at the beginning of the new year, due to uncertainty from the pandemic and inflation. However, the raising of funds will be partial, as, at the beginning of the year there will be a demand for funds internationally, which may increase costs. On the other hand, the expected upgrade of the Greek economy to an investment level in 2023 is estimated to reduce the cost of money in part.

1 billion a year per bank

In general, it is expected to raise funds of approximately 1 billion euros per bank per year by 2025 in order to meet the needs for MREL, ie the minimum requirement of own funds and eligible liabilities (Minimum Requirement of Own Funds and Eligible Liabilities). By the end of 2025, they must have raised a total of 16 billion.

THE Eurobank has already announced the planning for two issues of 500 million euros, one in the first and the second half of 2022, as it did in 2021, while at the beginning of 2023 it is estimated by analysts that there will be a possibility of refinancing their T2 bond.

In terms of Alpha Bank, in the recent presentation of the nine-month results, the Bank’s management stated that there is a margin for raising 800 million euros through AT1 funds. It is estimated that most of it will take place in early 2022.

THE National Bank has not announced its planning, however in the presentations it has mentioned that there is a margin for raising funds AT1 or T2 in 2022, with a capital gain of 200 base units corresponding to around 700 million euros.

According to what has been reported by the four systemic during the presentations to analysts, they prefer to proceed to these editions that are also counted in the MRELs rather than primarily titles for the MRELs as, at least at the moment, it is considered more interesting. On the other hand, analysts who have watched the presentations of the four systemic estimates that Piraeus Bank may only make releases for MRELs.

MREL funds

The four systemic banks have an obligation to create “security” funds of 26 billion euros by the end of 2025, something that will be done in installments. until January 1, 2026. This requirement was decided in 2015 so that banks in the Eurozone have the funds that can potentially be used to absorb losses and recapitalize them in the event of a consolidation.

The needs

According to the Bank of Greece, the total amount of MREL data for the four systemic banks amounts to 26.312 billion euros, while by 01.01.2026 the MREL data should increase by 16.118 billion euros. Within 2021, Greek banks issued securities and share capital increases calculated in MREL data, totaling 5.3 billion euros (of which 2.2 billion were capital increases), compared to 1.5 billion euros in 2020. The Greek systemic banks issued from 2018 securities totaling 5.85 billion euros. In 2021, securities issues were significantly higher than in previous years, mainly due to the need to meet the MREL targets and the stabilization of conditions in the capital markets. The cost for the issuance of these securities appears significantly reduced for the securities issued in 2020 and the first quarter of 2021 compared to the 2018 and 2019 issues. In 2021 the issuance cost shows a stabilization