(ANA) – An agreement reached between National Bank with EXIN Financial Services Holding for the sale of 75 pct of Ethniki Insurance, an insurance subsidiary, is credit positive for the bank, Moody’s said on Monday.
The Greek-American consortium Calamos-Exin Group has entered into a long-term partnership with the National Bank of Greece after acquiring a 75 percent stake for Ethniki Hellenic General Insurance.
The rating agency said that under the agreement, National Bank will receive 718.3 million euros, boosting its common equity Tier 1, CET1 capital ratio by around 110 basis points and lower its funding from ELA mechanism.
Moody’s said that National Bank was actively promoting a restructuring plan, selling assets and focusing on its domestic banking activities. The sale of a majority stake in Ethniki Insurance follows a series of capital actions undertaken by the bank to deleverage its balance sheet, such as the sale of its Bulgarian operations in June to KBC Bank. Following these two transactions, National Bank’s pro forma CET1 capital ratio will be raised to around 18.1 pct, the highest among its domestic rivals, from 16.0 pct in March 2017.
Moody’s said that the increase in CET1 ratio improved the bank’s tangible common equity without deferred tax assets, boosting the bank’s ability to absorb losses.
“National Bank will preserve a 25 pct equity stake in Ethniki Insurance, allowing the bank to forge a new corporate relation with EXIN and to continue benefiting from Ethniki Insurance’s profitable activities. National Bank will also raise additional liquidity, necessary to lower its high-cost funding from ELA (around 5.6 billion euros, or 7.4 pct of total assets in March 2017. Reducing borrowing from ELA, currently at a cost of 1.5 pct, will also reduce the bank’s funding cost, improving profitability and profit margins of the bank,” Moody’s said in a report.
National Bank of Greece S.A. entered into an agreement with EXIN Financial Services Holding B.V. to sell a 75% stake in Ethniki Hellenic General Insurance S.A for a total consideration of 718.3 million euros.
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