After nearly doubling his money supplying a capital infusion
to the Bank of Ireland (
is eying an investment in another troubled European financial
institution, National Bank of Greece (
). The bank this morning informed investors that it is
"considering alternative options" to meet requirements to
recapitalize Greek systemic banks, with Watsa's company, Fairfax
), among them. "FAIRFAX HOLDINGS, among others, has expressed
interest in participating in the recapitalization of the enlarged
NBG Group," the bank said.
The deadline for Greece's three major banks to recapitalize is
end-April. Together, they must raise 27.5 billion euros ($37
billion) through common equity and convertible bonds, 10% of
which must come from private investors to prevent becoming
government owned, Bloomberg reported.
National Bank of Greece's market price has declined 69% over the
past year and trades for $1 per share on Thursday.
The announcement of interest from Fairfax comes a week after
National Bank of Greece, the nation's largest bank, issued a
tender offer for the shares of Eurobank Ergasias, the nation's
second-largest bank. The merger aims to expedite
recapitalization, "streamline operating costs, contain loan
impairments and realize significant synergies worth approx. ?3
billion in terms of net present value," National Bank of Greece
said in a statement.
Combined, the new bank will have total assets of 177.7 million
euros, total loans of 109.7 euros and deposits of 87.9 billion
euros, and a footprint in Turkey and southeastern Europe.
National Bank of Greece at the nine months ended September 2012
had core Tier I ratio pro forma of 10.3%, an increase from 9.5% a
year previously, and its pro forma total CAR stood at 11.9%,
boosted by almost $10 billion worth of infusions from the
Financial Stability Fund in May and December, deferred tax and
its participation in a Greek government bond buyback program from
the Public Debt Management Agency on behalf of the Hellenic
Amidst the deep recession in Greece, the bank also saw its fourth
consecutive quarters of increases in loans 90 days or more past
due. Past-due loans reached 18% in the third quarter, up from 11%
in the third quarter of 2011, for the group as a whole, and
reached 21.9% in the third quarter of 2012, up from 11.8% in the
third quarter of 2011, for Greece.
Total deposits in Turkey and southeastern Europe, however, both
increased sequentially and year over year. Greek deposits held
flat sequentially, at $36.7 billion euros, their third
consecutive quarter of positive results.
When asked in a February interview in NBG's magazine whether the
recapitalization programs would help attract private investors,
CEO Alexandros Tourkolias responded: "I think that clarification
or supplementation of the terms of the recapitalization of Greek
banks will eventually serve to attract private investors. I can
assure you that everyone involved in the formulation of this
framework has understood the issue, and I hope soon we shall
reach a level of shared understanding regarding the private
nature of banks."
Watsa's previous publicized European financial recapitalization
took place last year, when he purchased Bank of Ireland stock for
$0.10 per share, along with
, Fidelity and other investors. The stock has since traded up to
$0.17 per share on Thursday afternoon, including a 50% rise year
Read more about what compelled Watsa to do the Bank of Ireland
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