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General Category => Investment Ideas => Topic started by: gary17 on May 08, 2014, 07:34:46 PM

Title: EGFEY - Eurobank
Post by: gary17 on May 08, 2014, 07:34:46 PM
I don't know much about banks but I got into this because Prem & Wilbur are at it again -
This was a state-owned bank & they did a capital raise and Prem & co got in at 0.30 euro / share or about 0.2 USD for EGFEY based on 2:1 ADR to common ratio & 1.38 exchange rate.  At 0.30 this is below book - I believe 50% of book value.  Has anyone bought this?  I have been loading the ADR as it is trading at about a 17% discount....  The shares are 0.37 euro right now on Athen's exchange... or about 0.255USD.... the way I see it is buy EGFEY at 0.20 you are paying the same price FFH is paying and there's a potential for this to converge to the Athen share prices -

Prem and Wilbur both got seats on the board so if they can replicate what they did at Bank of Ireland this should at least be a double.

Gary
Title: Re: Eurobank - EGFEY
Post by: PJM on May 08, 2014, 11:28:00 PM
Hi Gary

This seems to be almost the same investment as Bank Of Ireland by Prem & WR club.

I spent some time today understanding the financials of EuroBank, and it does look interesting. The situation in Greece is definitely improving so it wont be surprising to see PPI and NIM improving as a result of lower deposit spreads and reduced 90dpd, which peaked over last few years. Not sure if 21% CLP estimates are conservative enough.

After the new capital offering (which will start trading today) i think the BV should be around 7b which translates into 0.46euro, so the stock is trading 0.8x of BV. Not a very big margin of safety imo, unlike Bank of Ireland.

Are you investing just to replicate Prem & Wilbur, or you have any other investment thesis?

 
Title: Re: Eurobank - EGFEY
Post by: phil_Buffett on May 09, 2014, 01:47:33 AM
I don't know much about banks but I got into this because Prem & Wilbur are at it again -
This was a state-owned bank & they did a capital raise and Prem & co got in at 0.30 euro / share or about 0.2 USD for EGFEY based on 2:1 ADR to common ratio & 1.38 exchange rate.  At 0.30 this is below book - I believe 50% of book value.  Has anyone bought this?  I have been loading the ADR as it is trading at about a 17% discount....  The shares are 0.37 euro right now on Athen's exchange... or about 0.255USD.... the way I see it is buy EGFEY at 0.20 you are paying the same price FFH is paying and there's a potential for this to converge to the Athen share prices -

Prem and Wilbur both got seats on the board so if they can replicate what they did at Bank of Ireland this should at least be a double.

Gary

i also bought Shares here. i believe the Situation in greece will become gradually better. so it is Long term. the same as with ireland years ago.

i buy more next month when i have cash
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 04:01:25 AM

Hi PJM
Thanks, you get 0.8 book for the commons right? The otm shares are cheaper by another 17% so would give us slight better margin of safety.

Hi Gary

This seems to be almost the same investment as Bank Of Ireland by Prem & WR club.

I spent some time today understanding the financials of EuroBank, and it does look interesting. The situation in Greece is definitely improving so it wont be surprising to see PPI and NIM improving as a result of lower deposit spreads and reduced 90dpd, which peaked over last few years. Not sure if 21% CLP estimates are conservative enough.

After the new capital offering (which will start trading today) i think the BV should be around 7b which translates into 0.46euro, so the stock is trading 0.8x of BV. Not a very big margin of safety imo, unlike Bank of Ireland.

Are you investing just to replicate Prem & Wilbur, or you have any other investment thesis?
Title: Re: Eurobank - EGFEY
Post by: PJM on May 09, 2014, 04:25:36 AM

Hi PJM
Thanks, you get 0.8 book for the commons right? The otm shares are cheaper by another 17% so would give us slight better margin of safety.

Hi Gary

This seems to be almost the same investment as Bank Of Ireland by Prem & WR club.

I spent some time today understanding the financials of EuroBank, and it does look interesting. The situation in Greece is definitely improving so it wont be surprising to see PPI and NIM improving as a result of lower deposit spreads and reduced 90dpd, which peaked over last few years. Not sure if 21% CLP estimates are conservative enough.

After the new capital offering (which will start trading today) i think the BV should be around 7b which translates into 0.46euro, so the stock is trading 0.8x of BV. Not a very big margin of safety imo, unlike Bank of Ireland.

Are you investing just to replicate Prem & Wilbur, or you have any other investment thesis?

ADR normally trade at a discount or premium and they stay, so you can assume ADR will always stay at 15-17% discount. This is at least what i've seen with other ADRs. Also have you checked on the annual fees for ADR as they can be quite steep sometimes.
Title: Re: Eurobank - EGFEY
Post by: oddballstocks on May 09, 2014, 04:43:33 AM

Hi PJM
Thanks, you get 0.8 book for the commons right? The otm shares are cheaper by another 17% so would give us slight better margin of safety.

Hi Gary

This seems to be almost the same investment as Bank Of Ireland by Prem & WR club.

I spent some time today understanding the financials of EuroBank, and it does look interesting. The situation in Greece is definitely improving so it wont be surprising to see PPI and NIM improving as a result of lower deposit spreads and reduced 90dpd, which peaked over last few years. Not sure if 21% CLP estimates are conservative enough.

After the new capital offering (which will start trading today) i think the BV should be around 7b which translates into 0.46euro, so the stock is trading 0.8x of BV. Not a very big margin of safety imo, unlike Bank of Ireland.

Are you investing just to replicate Prem & Wilbur, or you have any other investment thesis?

ADR normally trade at a discount or premium and they stay, so you can assume ADR will always stay at 15-17% discount. This is at least what i've seen with other ADRs. Also have you checked on the annual fees for ADR as they can be quite steep sometimes.

There shouldn't be any ADR discount.  You can convert your ADR shares into ordinary local shares and capture the spread.  I've inquired about this with Fidelity in the past.  There is a per share fee of $.01-.05 depending on the size of the trade.

The better trade here in my mind is to buy up as many ADR's as humanly possible (maybe levered), and then short the common.  Convert the ADRs into the common and satisfy the short.
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 05:06:30 AM
Yes there's a ADR fees but that is still a wide margin after one takes that into consideration. This happened with bank of Ireland before , bit it was the commons that was mispriced. This time around it is the ADR ! Interesting strategy. Not sure if IB let me short Athens shares.
Title: Re: Eurobank - EGFEY
Post by: PJM on May 09, 2014, 05:31:12 AM

Hi PJM
Thanks, you get 0.8 book for the commons right? The otm shares are cheaper by another 17% so would give us slight better margin of safety.

Hi Gary

This seems to be almost the same investment as Bank Of Ireland by Prem & WR club.

I spent some time today understanding the financials of EuroBank, and it does look interesting. The situation in Greece is definitely improving so it wont be surprising to see PPI and NIM improving as a result of lower deposit spreads and reduced 90dpd, which peaked over last few years. Not sure if 21% CLP estimates are conservative enough.

After the new capital offering (which will start trading today) i think the BV should be around 7b which translates into 0.46euro, so the stock is trading 0.8x of BV. Not a very big margin of safety imo, unlike Bank of Ireland.

Are you investing just to replicate Prem & Wilbur, or you have any other investment thesis?

ADR normally trade at a discount or premium and they stay, so you can assume ADR will always stay at 15-17% discount. This is at least what i've seen with other ADRs. Also have you checked on the annual fees for ADR as they can be quite steep sometimes.

There shouldn't be any ADR discount.  You can convert your ADR shares into ordinary local shares and capture the spread.  I've inquired about this with Fidelity in the past.  There is a per share fee of $.01-.05 depending on the size of the trade.

The better trade here in my mind is to buy up as many ADR's as humanly possible (maybe levered), and then short the common.  Convert the ADRs into the common and satisfy the short.

Theoretically you are right !!

All the Indian ADRs are always trading at a constant high single digit premium/discount. Maybe it is coz its difficult to short in India.

I tried the arb strategy for HRTPY (brazilian adr) but found that IB doesnt do the conversion and the fees were quite high if I transferred the shares to depository manager and then converted it.
Title: Re: Eurobank - EGFEY
Post by: Cunninghamew on May 09, 2014, 07:03:32 AM
On Schwab it is 5 cents a share, so that wipes that out
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 07:10:51 AM
Ok... It just went up 9% from down 3% a few minutes ago .... And I haven't finished buying ....
Title: Re: Eurobank - EGFEY
Post by: LowIQinvestor on May 09, 2014, 07:34:30 AM
I thought the ADR/Ordinary ratio was 2:1 ?

http://www.adrbnymellon.com/dr_profile.jsp?cusip=26844B209

"Ratio DR:ORD   2:1"

Am I missing something?
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 07:38:36 AM
It is...

so ADR = 0.205 this morning (earlier)

1 common based on ADR = 2 x 0.205 / 1.38 = 0.30 

but the real commons are trading at 0.35 

Gary

Title: Re: Eurobank - EGFEY
Post by: TwoCitiesCapital on May 09, 2014, 07:39:29 AM
Large spreads can occur between ADR securities and the underlying shares because often times people are unable to take advantage of the arbitrage.

This happened with Bank of Ireland a year or two ago. Melon Trust "closed the book for issuance" which means that common shares weren't convertible to ADRs or vice versa for an extended period of time. The spread collapsed the day the book was reopened and spread shortly after it was closed again. My guess is that it's a similar dynamic here or you're simply dealing with a liquidity premium.
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 07:48:03 AM
So the higher liquidity provides premium?

in Bank of Ireland's case the ADRs were at a premium - in fact, they are still at a slight premium today, although the gap did close.  It was much wider before.

In this case the ADRs are at a discount. 

Gary
Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 07:49:57 AM
the price difference is not the thesis here.... btw.... 

the thesis is it's a private bank , very well capitalized, in Greece, with Prem and Wilbur on the board, and a turn around story.......   the discount is just a nice thing to have...
Title: Re: Eurobank - EGFEY
Post by: TwoCitiesCapital on May 09, 2014, 07:50:41 AM
So the higher liquidity provides premium?

in Bank of Ireland's case the ADRs were at a premium - in fact, they are still at a slight premium today, although the gap did close.  It was much wider before.

In this case the ADRs are at a discount. 

Gary

Yes. Higher liquidity is sold at a premium to shares that have no liquidity. It doesnt have to be the same as the bank of Ireland ADRs just because it appears similar. I have no idea why the spread between the two grew so large but I definitely know why it didn't close in a short period of time.
Title: Re: Eurobank - EGFEY
Post by: jrallen81 on May 09, 2014, 09:17:06 AM
dumb question, but how do you check the ratio of ADRs to common?
Title: Re: Eurobank - EGFEY
Post by: jrallen81 on May 09, 2014, 09:21:20 AM
also, if you buy right now at 0.23, that's only a $0.02 discount to the ADR price from the close, 8% isn't bad, but not -15%, so watch the pennies!

Title: Re: Eurobank - EGFEY
Post by: gary17 on May 09, 2014, 09:40:31 AM
Yes, I got a large limit order at about 0.205 for the last few days - i have not been loading up as fast as I'd like to.  Oh well.

some more points:

i believe all other Greek banks are trading well above book...   so this is the only one below book...

Gary
Title: Re: EGFEY - Eurobank
Post by: Hielko on May 09, 2014, 11:48:52 AM
This probably should trade at a discount to the shares in Athens. You most likely incur a ADR fee of 0.02 dollar/year which is 8.5% in fees every single year and a conversion probably costs 0.05 dollar which is 21%. There is absolutely no way I would want to own this ADR at a 15% discount; it's overvalued relative to the Greek shares instead of undervalued!
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 09, 2014, 11:51:34 AM
There's no annual fees based on my discussion. Pick up the phone and call your broker.
Title: Re: EGFEY - Eurobank
Post by: Hielko on May 09, 2014, 11:56:35 AM
Are you very sure about that? Who is the depository? Have you talked to them?
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 09, 2014, 12:04:34 PM
I believe bny mellon
I should call them but the info below indicates no custodian... this is OTC
https://www.adr.com/DRDetails/Overview?cusip=26844B209
Title: Re: EGFEY - Eurobank
Post by: PJM on May 11, 2014, 07:47:32 PM
I did bit more research on EuroBank over the weekend. I also did some comparative analysis with its peers, mainly NGB and Piraeus.

From financial perspective, Eurobank seems to be in the same shape as other banks. In fact NGB and Pireaus are performing better on many metrics. Especially NGB - it is the only bank with net positive income post provision in 2013, has a higher CASA ratio, better L/D ratio etc. It also has Finansbank in turkey which is performing very well (contributing more than 50% to PPI) on the back of strong Turkish economy. I think Pireaus bank is best capitalised and probably the only bank among the three to have 10% Basel III fully loaded ratio after redeeming the preference shares.

I think EuroBank is attractive for two reasons
1. It generates substantial non-interest income (>20%) with its strong positioning in insurance, asset management, private banking, equity brokerage etc. This fee income/assets is low at 0.35% as compared to pre-crisis level of 0.9%. As economy improves fee income should back to normalized level of approx 0.7%
2. It is trading below BV (0.8x BV) whereas other banks are trading marginally above BV.

However any investment in greek banks has to be based on the assumption that Greek economy continues to improve and NPL will continue to come down. If that assumption holds true, investors in either bank are poised for good returns.
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 12, 2014, 04:58:37 AM
Quote
There is currently not an annual fee on this name.
 
Many thanks
 
Mark
 
Mark Lewis
BNY Mellon Depositary Receipts
Tel: +44 207 163 7407
mark.lewis@bnymellon.com
The Bank of New York Mellon (International) Ltd. acts as arranger for the full range of securities services offered by The Bank of New York Mellon and its affiliates in EU countries other than the UK.
Title: Re: EGFEY - Eurobank
Post by: PJM on May 12, 2014, 05:01:49 AM
Thanks for the confirmation. Without annual fees, it becomes more compelling to buy ADR
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 12, 2014, 05:17:34 AM
However any investment in greek banks has to be based on the assumption that Greek economy continues to improve and NPL will continue to come down. If that assumption holds true, investors in either bank are poised for good returns.
This is essentially the thesis here -- can over the next 5 to 10 years this Bank delivery earnings back to shareholders that's worth at least today's price.... so you are getting the future earnings for free :)
Title: Re: EGFEY - Eurobank
Post by: argonaut on May 12, 2014, 07:39:17 AM
Hi Gary,

How much do Premier and Wilbur each have in it and did they pick up a chunk of the new shares too?
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 12, 2014, 08:04:30 AM
i think they are almost half of the new shares issued
http://www.gurufocus.com/news/255692/prem-watsa-wilbur-ross-invest-almost-half-a-billion-in-greeces-eurobank
the thesis here is very simple:
- can prem & co repeat what they did at BKIR?
- can europe finally come out of its mess?
- can the bank be profitable again and is the current market valuation below what it would earn over the course of its expected lifetime? 
my own thinking is yes & given the ADR and the commons I went with the ADR for some additional margin of safety, albeit it's not that significant as others have suggested.

there's also alpha bank which David Einhorn has invested in as well that is worth looking at.  And of course NBG... 
Gary
Title: Re: EGFEY - Eurobank
Post by: argonaut on May 12, 2014, 08:50:09 AM
Very helpful! This sentence raised a yellow flag for me: "Loans 90 days past due at year-end 2013 rose to 29.4% from 22.8% in 2012."
Title: Re: EGFEY - Eurobank
Post by: PJM on May 12, 2014, 06:40:50 PM
Hi Gary,

How much do Premier and Wilbur each have in it and did they pick up a chunk of the new shares too?

90% of the new offering (2.8b euro) was taken by international investors which includes cornerstone investors such as Fairxfax, WBR, Capital and Fidelity. I guess these investors subscribed for more than their initial commitments.

http://www.eurobank.gr/Uploads/pdf/PressRelease_OfferingResults_OfferPrice_ENG.pdf
Title: Re: EGFEY - Eurobank
Post by: PJM on May 12, 2014, 06:46:38 PM
Very helpful! This sentence raised a yellow flag for me: "Loans 90 days past due at year-end 2013 rose to 29.4% from 22.8% in 2012."

The increase is due to acquisition of TT and Proton, which were acquired as "clean banks". The credit quality of Eurobank has supposedly improved with the acquisition of these banks. Sans acquisition, 90dpd actually fell in 2013 (542m) compared to 2012(692m).
Title: Re: EGFEY - Eurobank
Post by: argonaut on May 12, 2014, 08:52:22 PM
Thanks for the link and info!
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on May 16, 2014, 01:18:27 AM
http://www.valuewalk.com/2014/05/wilbur-ross-greece/

wilbur ross talks about greece and Eurobank

at 9:30 minutes
Title: Re: EGFEY - Eurobank
Post by: gary17 on May 16, 2014, 06:22:25 AM
thx - let's see if Greece bounces back first or deflation... i won't hold my breath   8)
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on June 19, 2014, 08:04:31 AM
http://www.valuewalk.com/2014/06/wilbur-ross-ireland-deal/
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 19, 2014, 08:09:36 AM
http://www.valuewalk.com/2014/05/wilbur-ross-greece/

wilbur ross talks about greece and Eurobank

at 9:30 minutes

I know you like to follow great investors and most of the time it works well. But I still don't understand why it is better to buy EuroBank while you can use the same money to buy BPOP.
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on June 19, 2014, 08:29:13 AM
http://www.valuewalk.com/2014/05/wilbur-ross-greece/

wilbur ross talks about greece and Eurobank

at 9:30 minutes

I know you like to follow great investors and most of the time it works well. But I still don't understand why it is better to buy EuroBank while you can use the same money to buy BPOP.

greece was and  is the biggest mess here in europe. it is at the absolutely bottom. beaten up big time. so i like the Situation. i like that prem and wilbur invested in Eurobank. it is a great Investment. their Team did a great Job at bank of ireland. i expect the same in greece. your pick in puerto rico is maybe also good, but iam more comfortable with greece right now. greece in comparison to puerto rico i would take greece.  but i also look at BPOP. maybe i will buy someday a few.
Title: Re: EGFEY - Eurobank
Post by: fareastwarriors on July 10, 2014, 12:20:38 PM
Holdings list from Bloomberg attached
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on July 24, 2014, 03:24:52 AM
stock down the last time. i load up a big chunk of Shares.
Long term thinking.


http://thepeninsulaqatar.com/business/international-business/292323/greek-banks-can-handle-capital-needs-in-ecb-test

https://www.valuewalk.com/2014/07/hedge-funds-greece/
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 24, 2014, 08:36:57 AM
stock down the last time. i load up a big chunk of Shares.
Long term thinking.


http://thepeninsulaqatar.com/business/international-business/292323/greek-banks-can-handle-capital-needs-in-ecb-test

https://www.valuewalk.com/2014/07/hedge-funds-greece/

I took a look but still confused. From the price chart, it kept going down, so where did Dromeus buy that gave him a big profit on this bank?
https://www.google.com/finance?q=FRA%3AEFGC&ei=HiTRU6nDAYSgiQLd0IGoBg

They have total assets of 76bn. I assume a 1% roa for normalized environment, which is 760 bn. I think this make sense as their current pretax-pre-provision quarterly income is 196 mn, so that implies 780 mn in the longer term.
Current market cap is 4.8 bn, so you are buying at a 7 forward P/E, which is not very attractive. Did you assume high growth for this bank?

Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on August 11, 2014, 02:33:51 PM
stock down the last time. i load up a big chunk of Shares.
Long term thinking.


http://thepeninsulaqatar.com/business/international-business/292323/greek-banks-can-handle-capital-needs-in-ecb-test

https://www.valuewalk.com/2014/07/hedge-funds-greece/

I took a look but still confused. From the price chart, it kept going down, so where did Dromeus buy that gave him a big profit on this bank?
https://www.google.com/finance?q=FRA%3AEFGC&ei=HiTRU6nDAYSgiQLd0IGoBg

They have total assets of 76bn. I assume a 1% roa for normalized environment, which is 760 bn. I think this make sense as their current pretax-pre-provision quarterly income is 196 mn, so that implies 780 mn in the longer term.
Current market cap is 4.8 bn, so you are buying at a 7 forward P/E, which is not very attractive. Did you assume high growth for this bank?




greece will steady recover. big opportunity to get growth as good bank. good owners like watsa and ross and their Team from bank of ireland. they will make it. i love the Situation. so much hate and fear

http://www.valuewalk.com/2014/08/brar-investment-fund-lp-reports-1-7-gain-q2-2014-holds-15-cash-pursue-opportunities/
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 11, 2014, 05:48:20 PM
stock down the last time. i load up a big chunk of Shares.
Long term thinking.


http://thepeninsulaqatar.com/business/international-business/292323/greek-banks-can-handle-capital-needs-in-ecb-test

https://www.valuewalk.com/2014/07/hedge-funds-greece/

I took a look but still confused. From the price chart, it kept going down, so where did Dromeus buy that gave him a big profit on this bank?
https://www.google.com/finance?q=FRA%3AEFGC&ei=HiTRU6nDAYSgiQLd0IGoBg

They have total assets of 76bn. I assume a 1% roa for normalized environment, which is 760 bn. I think this make sense as their current pretax-pre-provision quarterly income is 196 mn, so that implies 780 mn in the longer term.
Current market cap is 4.8 bn, so you are buying at a 7 forward P/E, which is not very attractive. Did you assume high growth for this bank?




greece will steady recover. big opportunity to get growth as good bank. good owners like watsa and ross and their Team from bank of ireland. they will make it. i love the Situation. so much hate and fear

http://www.valuewalk.com/2014/08/brar-investment-fund-lp-reports-1-7-gain-q2-2014-holds-15-cash-pursue-opportunities/

Story investing could be one of the major errors. SHLD is a vivid example. :)
Wilbur Ross is a great investor but he is not fool-proof. Check out SNBC.
The link that you showed basically said a fund called Brar investment bought some Eurobank stocks. But their "thesis" laid down is no more than story telling, rather than checking any numbers.
Title: Re: EGFEY - Eurobank
Post by: gary17 on August 16, 2014, 06:04:55 AM
Seems like Greece is nearing the end of its recession:  http://www.bloomberg.com/news/2014-08-13/greece-s-recession-eases-as-country-nears-end-to-six-year-slump.html

And here's an interesting article in Greek.... seems like Eurobank is amongst the cheapest while having the pillar investors:  goo.gl\9qcUVl 

I've also attached another Eurobank writeup I found -   

Good luck to all :)

Gary
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on August 16, 2014, 11:10:35 AM
Seems like Greece is nearing the end of its recession:  http://www.bloomberg.com/news/2014-08-13/greece-s-recession-eases-as-country-nears-end-to-six-year-slump.html

And here's an interesting article in Greek.... seems like Eurobank is amongst the cheapest while having the pillar investors:  goo.gl\9qcUVl 

I've also attached another Eurobank writeup I found -   

Good luck to all :)

Gary

thanks gary for the links :)

i like Eurobank very much. greece will come back and Eurobank will Profit from this. i hope we all have luck  :)
Title: Re: EGFEY - Eurobank
Post by: dolce far niente on August 20, 2014, 04:24:56 AM
Eurobank announced that it had entered into an agreement with entities of the Ukrainian Delta Bank group to sell its “PJSC Universal Bank” subsidiary in the Ukraine, for a total consideration of EUR 95mn.

The group reports that the transactions is expected to have a 5bp negative impact on its capital metrics.

The transaction is subject to customary conditions and authority approvals while is expected to close by the end of 2014.
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 20, 2014, 07:03:57 AM
Eurobank announced that it had entered into an agreement with entities of the Ukrainian Delta Bank group to sell its “PJSC Universal Bank” subsidiary in the Ukraine, for a total consideration of EUR 95mn.

The group reports that the transactions is expected to have a 5bp negative impact on its capital metrics.


Does that mean they are selling below the book value?
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 20, 2014, 07:06:58 AM
Seems like Greece is nearing the end of its recession:  http://www.bloomberg.com/news/2014-08-13/greece-s-recession-eases-as-country-nears-end-to-six-year-slump.html

And here's an interesting article in Greek.... seems like Eurobank is amongst the cheapest while having the pillar investors:  goo.gl\9qcUVl 

I've also attached another Eurobank writeup I found -   

Good luck to all :)

Gary

"Eurobank’s P/TBV ratio is less than half of the other banks’ average."
Really? The market cap is 6.24 Bn, which is not far from their $9.6 Bn book value.

Remember when Wilbur Ross bought IRE, he entered at 30% of book value, and Ireland is a better and stronger economy than Greece.  :)

What justifies such an optimism? Why not buy BPOP, which trades at a similar discount to book with only 2% of nonperforming loans, instead of Eurobank which has many times more nonperforming loans?
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 20, 2014, 07:14:25 AM
Do you know if DTC charges ADR fees for this one? I recently got charged 0.01 per share for my FIATY holdings. If EGFEY is charged 0.01 per share, that would be huge!
Title: Re: EGFEY - Eurobank
Post by: phil_Buffett on October 26, 2014, 12:59:00 PM
http://www.bloomberg.com/news//2014-10-26/eurobank-national-bank-plans-may-cut-capital-gap-to-zero.html

very important that there is no big capital gap at Eurobank. now they can make their way going foreward. streamline the Company. great!!
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 24, 2015, 01:54:38 PM
http://www.bloomberg.com/news//2014-10-26/eurobank-national-bank-plans-may-cut-capital-gap-to-zero.html

very important that there is no big capital gap at Eurobank. now they can make their way going foreward. streamline the Company. great!!

How does the board think about this now? Seems like getting in at a 75+% discount (in USD terms) from where Prem/Wilbur et al. did isn't a bad price. So what's the story with the situation? New elections for a new government that wasn't as extreme as most believed doesn't seem worth of a 75% discount - especially given the recently agreed to extension to cover the finances. Is there company specific risk that has occurred or a real threat developing from deposit flight?

I'm planning on looking into this more in depth sometime soon but wanted to know if there were any obvious land mines that would make we simply put it into the too hard pile.
Title: Re: EGFEY - Eurobank
Post by: constructive on February 24, 2015, 02:18:31 PM
Is there company specific risk that has occurred or a real threat developing from deposit flight?

Every Greek bank has probably suffered significant capital flight in the last month and continues to be at high risk of deposit loss going forward.

http://www.cnbc.com/id/102439432#.

"Sources in the Greek banking sector have told Greek newspapers that as much as 25 billion euros (US $28.4 billion) have left Greek banks since the end of December."
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 24, 2015, 02:24:58 PM
Is there company specific risk that has occurred or a real threat developing from deposit flight?

Every Greek bank has probably suffered significant capital flight in the last month and continues to be at high risk of deposit loss going forward.

http://www.cnbc.com/id/102439432#.

"Sources in the Greek banking sector have told Greek newspapers that as much as 25 billion euros (US $28.4 billion) have left Greek banks since the end of December."

I see - given that Eurobank was 18% of deposits we could probably scale proportionally to determine that they've lost as much as EUR 4.5B in deposits. This is all driven by political risks and concerns about the new government though, right? People are just scared of the changes that new government might make and GREXIT is a possibility that is back on the table? Just trying to understand recent market movements in the context of what is actually occurring - Prem seems to stand behind the investment even after speaking with the government and I haven't seen any word that W. Ross is out. Both of them have experience with this sort of thing and haven't jumped ship - makes me wonder if now is the time to take advantage of being a small investor and act.
Title: Re: EGFEY - Eurobank
Post by: rb on February 24, 2015, 03:31:36 PM
One potential landmine.... if Greece exits eurozone alll the Greek banks are bankrupt. 
Title: Re: EGFEY - Eurobank
Post by: peter1234 on February 25, 2015, 12:13:27 AM
Looks like a binary outcome is probable: Heads you win, tail you lose.
With lots of drama in between.
 ???
Title: Re: EGFEY - Eurobank
Post by: rb on February 25, 2015, 12:18:25 AM
Looks like a binary outcome is probable: Heads you win, tail you lose.
With lots of drama in between.
 ???
Basically yes... with shades of gray. Tail you definitely loose. Heads we see how your thesis plays out. But at the very least you're flipping a coin. Not a lot of margin of safety behind it.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 25, 2015, 06:17:50 AM
One potential landmine.... if Greece exits eurozone alll the Greek banks are bankrupt.

Could we dig into this a little more - why would that be the case? I'm having a hard time understanding this argument, but I've also never studied banks in currency regime changes.
Title: Re: EGFEY - Eurobank
Post by: Sunrider on February 25, 2015, 08:21:30 AM
Two scenarios on Grexit:

1. People pull out so much in deposit money before it happens that the banks are bankrupt (basically a bank run). That funding currently is replenished by ECB facilities. Without these, the banks would not be able to honour the requests for withdrawal. So, basically, you have a situation where at least from a liquidity perspective the banks would be insolvent (true sense of the word). Whether the asset value then covers more than the liabilities is anyones guess once the dust has settled (remember that there will be tremendous economic turmoil during that time ... and the question only arises to the extent that there will be an orderly process of liquidation in which first everything is frozen and then unwound).

2. The government decides to go all in and leave now. The impose currency controls today. Tonight they re-introduce a new Drachma and re-denominate all domestic debt, currency, accounts, etc. in that new currency. The banks are not technically insolvent at that point. Tomorrow two things happen -
(1) the Greek government tells the rest of Europe that it still wants to repay its debts but since the new Drachma will immediately plunge in value against the "hard" Euro, that's wishful thinking and everyone knows it. They basically default in quick order since they don't have Euros nor can the exchange enough new Drachmas for Euros on the market to pay up.
(2) the ECB demands repayment on its facilities to the banks. The have the same problem - they got Drachmas, not Euros, and so they are no not able to pay, i.e. insolvent.

If all of these politicians just play a bit more smartly .... good article in the Economist this week how the Greeks' approach to these negotiations blew a big chance.

C.
One potential landmine.... if Greece exits eurozone alll the Greek banks are bankrupt.

Could we dig into this a little more - why would that be the case? I'm having a hard time understanding this argument, but I've also never studied banks in currency regime changes.
Title: Re: EGFEY - Eurobank
Post by: rb on February 25, 2015, 08:24:20 AM
One potential landmine.... if Greece exits eurozone alll the Greek banks are bankrupt.

Could we dig into this a little more - why would that be the case? I'm having a hard time understanding this argument, but I've also never studied banks in currency regime changes.
The short answer is this. If the bank runs don't bankrupt the banks before the Euro exit. Post exit basically the banks have assets in Drachmas and liabilities in Euros. Drachma drops and wipes out the banks capital. The end.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 25, 2015, 08:33:27 AM
Two scenarios on Grexit:

1. People pull out so much in deposit money before it happens that the banks are bankrupt (basically a bank run). That funding currently is replenished by ECB facilities. Without these, the banks would not be able to honour the requests for withdrawal. So, basically, you have a situation where at least from a liquidity perspective the banks would be insolvent (true sense of the word). Whether the asset value then covers more than the liabilities is anyones guess once the dust has settled (remember that there will be tremendous economic turmoil during that time ... and the question only arises to the extent that there will be an orderly process of liquidation in which first everything is frozen and then unwound).

2. The government decides to go all in and leave now. The impose currency controls today. Tonight they re-introduce a new Drachma and re-denominate all domestic debt, currency, accounts, etc. in that new currency. The banks are not technically insolvent at that point. Tomorrow two things happen -
(1) the Greek government tells the rest of Europe that it still wants to repay its debts but since the new Drachma will immediately plunge in value against the "hard" Euro, that's wishful thinking and everyone knows it. They basically default in quick order since they don't have Euros nor can the exchange enough new Drachmas for Euros on the market to pay up.
(2) the ECB demands repayment on its facilities to the banks. The have the same problem - they got Drachmas, not Euros, and so they are no not able to pay, i.e. insolvent.

If all of these politicians just play a bit more smartly .... good article in the Economist this week how the Greeks' approach to these negotiations blew a big chance.

C.
One potential landmine.... if Greece exits eurozone alll the Greek banks are bankrupt.

Could we dig into this a little more - why would that be the case? I'm having a hard time understanding this argument, but I've also never studied banks in currency regime changes.

I guess this is what I was thinking. I assumed if it would happen that it would be #2. So all loans and deposits would be converted to a lower valued currency. The Greek government would default on its debt Euro which affects yields and the currency value. I wasn't considering the liquidity facilities provided to the Greek banks by the ECB. That's what I was missing.

I'm not sure if a Grexit is more than remote likelihood though. Most people in Greece don't want this and neither does Europe simply because of the precedent it sets for the other countries on the periphery that might want out as well. Sure it's not a big deal when Greece leaves...but what about Italy or Ireland?  Ultimately, both sides have good reason for Greece to remain and it's simply negotiating the terms.

Thanks for the all of the insight here guys. I'm going to look into the numbers a bit more.
Title: Re: EGFEY - Eurobank
Post by: rb on February 25, 2015, 08:45:43 AM
I'm not sure if a Grexit is more than remote likelihood though. Most people in Greece don't want this and neither does Europe simply because of the precedent it sets for the other countries on the periphery that might want out as well. Sure it's not a big deal when Greece leaves...but what about Italy or Ireland?  Ultimately, both sides have good reason for Greece to remain and it's simply negotiating the terms.

I think it's more than just a remote possibility. While there is still support in Greece for the Euro, that support is fading. At the latest rounds of talks Germany acted like the could care less if Greece leaves - this may just be political posturing though so maybe don't read too much into it. But if Greece stays in the Euro is austerity as far as they eye can see.

Greeks are now a people with nothing left to loose which makes them dangerous. Faced with a choice between letting the banks fail and another 20 years or austerity and unemployment, they may just choose to let the banks fail.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on February 25, 2015, 08:56:51 AM
Wow some people here should read a little less news. Does anyone believe there is a higher than 10-20%  chance at this point that Greece leaves the eurozone or returns to the drachma?

 Given that they already had a bank run that they managed and the fact Greece is just a small part of the eu (easier to buffer), I wouldn't worry much about that either.

Greeks nothing to lose? I'm betting that they have at least some knowledge of economics and history so that emotions don't get the best of them. On the side of Germany etc, that was imo mainly posturing yes. A mexican stand off.. Both sides played it hard so they each got something to work with the coming months.

I would look at the business numbers and see what those tell me and stop worrying about known risks that are highly visible and anticipated and more than likely priced in already....
Title: Re: EGFEY - Eurobank
Post by: rb on February 25, 2015, 09:05:10 AM
Wow some people here should read a little less news. Does anyone believe there is a higher than 10-20%  chance at this point that Greece leaves the eurozone or returns to the drachma?

 Given that they already had a bank run that they managed and the fact Greece is just a small part of the eu (easier to buffer), I wouldn't worry much about that either.

Greeks nothing to lose? I'm betting that they have at least some knowledge of economics and history so that emotions don't get the best of them. On the side of Germany etc, that was imo mainly posturing yes. A mexican stand off.. Both sides played it hard so they each got something to work with the coming months.

I would look at the business numbers and see what those tell me and stop worrying about known risks that are highly visible and anticipated and more than likely priced in already....
I don't know how to handicap the odds of a Greek exit and I don't think anyone can. All I'm saying is that it is more than just a remote possibility.

As for the Greek people of course they have nothing to loose. A vast number of their population  have no money, no job, no prospects. Do you think that they're just going to ignore that?

Btw, economics and history point to the fact that they'd be better off if they exit.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 25, 2015, 10:08:30 AM
Wow some people here should read a little less news. Does anyone believe there is a higher than 10-20%  chance at this point that Greece leaves the eurozone or returns to the drachma?

 Given that they already had a bank run that they managed and the fact Greece is just a small part of the eu (easier to buffer), I wouldn't worry much about that either.

Greeks nothing to lose? I'm betting that they have at least some knowledge of economics and history so that emotions don't get the best of them. On the side of Germany etc, that was imo mainly posturing yes. A mexican stand off.. Both sides played it hard so they each got something to work with the coming months.

I would look at the business numbers and see what those tell me and stop worrying about known risks that are highly visible and anticipated and more than likely priced in already....
I don't know how to handicap the odds of a Greek exit and I don't think anyone can. All I'm saying is that it is more than just a remote possibility.

As for the Greek people of course they have nothing to loose. A vast number of their population  have no money, no job, no prospects. Do you think that they're just going to ignore that?

Btw, economics and history point to the fact that they'd be better off if they exit.

That "vast" number is still far less than half. The remaining 70-75% have quite a bit to lose and have said that they don't fancy the idea of exiting. Bankrupting all of the financial institutions in the country would do nothing for their "recovery" though the weaker currency would help them be more competitive which could assist their recovery in the LONG run. That doesn't speak to the short run where asset prices collapse, companies/individuals are bankrupted, and that 25% unemployed becomes significantly more as economic activity in the country halts.

Even if we assume the weaker currency would help them in the long run, when was the last time you knew a politician to make a decision for the long run? I don't see it in the U.S. I don't see it in Europe. I don't see it in most places. Most politicians certainly don't care about the long-run consequences and their constituents don't hold them responsible for it because they themselves don't think about the long run. Decisions are made based on short-to-medium term gain in pretty much every country I've ever paid attention to.

Lastly, staying in the Euro doesn't guarantee massive pain for the Greek people. It guarantees that some fiscal autonomy will have to be ceded (like should happen with all Euro members) and that Greece will have to become more competitive on a global basis, but that's about all it guarantees. Realistically, if it makes sense for Greece to exit, it would make sense for most of the nations on the periphery and in Southern Europe to exit. I can't claim that it makes sense to have a common currency area - I think things would have ultimately been better if it was simply an economic union without a single currency but that's in the past and we have to deal with what we've built. It's probably too painful to go back so this Euro-monster will limp forward.

I'm not saying there's no chance they leave - I'm saying this has been the broken record that has been playing since 2011 and it hasn't even come close to happening yet. There's a reason for that - neither side stands to benefit from it in the short-to-medium term so I think the risk is being overhyped.

Title: Re: EGFEY - Eurobank
Post by: rb on February 25, 2015, 10:41:53 AM
Zach,

I think we got a bit sidetracked here. I don't want to get into a point by point macro analysis of Greece cause I don't think the time required to pull all the data is worth it and the Eurostat website sucks.

You asked whether there are some potential land mines and I pointed to one. Also in my opinion the chance of that mine going off is not insignificant. Of course no one can know what the true likelihood is. One can only speculate.

But here you have a situation where factors outside of a company's control can cause catastrophic failure. That is enough to make me stay away. Plenty of other fish out there. However, if you think that the risk is worth it, then go ahead.

rb
Title: Re: EGFEY - Eurobank
Post by: NeverLoseMoney on February 25, 2015, 02:13:22 PM
Wow some people here should read a little less news. [...]
+1
The main thing I've learned from the Greek situation is that news is poisonous to the investor's mind. At the same time you do need some information. My solution, as I said in a post elsewhere, is to only listen to people with skin in the game (like Wilbur Ross and Prem Watsa) and people who actually live in Greece.

With that in mind: Wilbur Ross seemed to very much like the idea of investing more in Eurobank last week (watch from 03:15): http://www.bloomberg.com/news/videos/2015-02-18/europe-is-very-attractive-for-investment-ross-says
The interviewer and Bloomberg translated his statement as "Europe is very attractive", but to me it seemed quite clear he was talking about Eurobank specifically here.

I don't know Ross very well, but I admire the way he separates his political views and his investment perspective. He strikes me as a conservative / Republican type and I'm going to take a wild guess that he is probably not a big fan of the Syriza party in Greece or Greek politics in general. Still that does not stop him from investing there when the price is right. And Prem Watsa: betting on deflation in Europe, but at the same time investing in Greece. You have to keep an open mind as an investor and evaluate opportunities as they come. This is very hard to do if you listen too much to the media or if you cant separate your personal political views from your investing.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 25, 2015, 02:44:59 PM
Wow some people here should read a little less news. [...]
+1
The main thing I've learned from the Greek situation is that news is poisonous to the investor's mind. At the same time you do need some information. My solution, as I said in a post elsewhere, is to only listen to people with skin in the game (like Wilbur Ross and Prem Watsa) and people who actually live in Greece.

With that in mind: Wilbur Ross seemed to very much like the idea of investing more in Eurobank last week (watch from 03:15): http://www.bloomberg.com/news/videos/2015-02-18/europe-is-very-attractive-for-investment-ross-says
The interviewer and Bloomberg translated his statement as "Europe is very attractive", but to me it seemed quite clear he was talking about Eurobank specifically here.

I don't know Ross very well, but I admire the way he separates his political views and his investment perspective. He strikes me as a conservative / Republican type and I'm going to take a wild guess that he is probably not a big fan of the Syriza party in Greece or Greek politics in general. Still that does not stop him from investing there when the price is right. And Prem Watsa: betting on deflation in Europe, but at the same time investing in Greece. You have to keep an open mind as an investor and evaluate opportunities as they come. This is very hard to do if you listen too much to the media or if you cant separate your personal political views from your investing.

Thanks so much for sharing that video. I've spent the last two days looking for video clips and write ups about Ross' view on Eurobank and wasn't able to find much. I certainly didn't see this clip. I've been wondering why he hasn't been buying more and this pretty much sums it up - he can't until they release the annual report. That's extremely comforting - I was concerned on his silence, his lack of buying, and the fact that this bet was only 1/10th the size of his investment in Bank of Ireland. I guess we can't extrapolate that he will purchase upon the release, but it certainly explains his lack of activity given the current pricing.

I generally do my own research and don't buy things just because gurus do, but I do occasionally look into ideas that I wouldn't have previously considered if the price declines significantly after a guru purchase and they still hold. That's what prompted my current interest into Eurobank - a 75% decline after Prem/Ross' investment was a huge invitation for me to take a look but I was concerned that Ross wasn't adding.

Title: Re: EGFEY - Eurobank
Post by: constructive on February 25, 2015, 03:01:43 PM
My solution, as I said in a post elsewhere, is to only listen to people with skin in the game (like Wilbur Ross and Prem Watsa) and people who actually live in Greece.

I don't think it's a good idea to only assign credibility to people who agree with you. People who have reviewed Greek banks and have decided to short them, or pass on them, have also made serious investing decisions.
Title: Re: EGFEY - Eurobank
Post by: NeverLoseMoney on February 26, 2015, 07:30:00 AM
My solution, as I said in a post elsewhere, is to only listen to people with skin in the game (like Wilbur Ross and Prem Watsa) and people who actually live in Greece.

I don't think it's a good idea to only assign credibility to people who agree with you. People who have reviewed Greek banks and have decided to short them, or pass on them, have also made serious investing decisions.
Short sellers have skin in the game as well, so yes, I am interested in what they have to say. People who take a pass don't really show any strong conviction one way or the other. If you don't put your money where your mouth is it is just noise.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 26, 2015, 08:24:17 AM
For those if you interested in getting a better perspective on Yanis Varoufakis, here is a link to several articles penned by him.

http://www.thepressproject.net/list.php?author=Yanis Varoufakis (http://www.thepressproject.net/list.php?author=Yanis Varoufakis)

Specifically, there is this one where he describes the bailout of Eurobank and the subsequent resale to private investors. The article is extremely negative (and justifiably so, it would seem); however, the anger seems to be aimed at the politicians involved and less towards the private investors which is good.
http://www.thepressproject.net/article/61225/EUROBANK-Another-scandal-re-packaged-as-part-of-the-Greek-Success-Story (http://www.thepressproject.net/article/61225/EUROBANK-Another-scandal-re-packaged-as-part-of-the-Greek-Success-Story)
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 26, 2015, 12:02:49 PM
Anyone able to understand what was voted on at the General Meeting in November? I've read through this a few times but still can't make heads nor tails of the special reserve that is being created with rights to buy common shares on behalf of the Greek State that is somehow related to DTAs and DTCs.....

http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf (http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf)
Title: Re: EGFEY - Eurobank
Post by: lathinker on February 27, 2015, 01:40:06 AM
Anyone able to understand what was voted on at the General Meeting in November? I've read through this a few times but still can't make heads nor tails of the special reserve that is being created with rights to buy common shares on behalf of the Greek State that is somehow related to DTAs and DTCs.....

http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf (http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf)

Not sure if I get all the details right, but can give some context:

Under the Basel III framework, DTAs are deducted when it comes to assessing a banks capital. DTAs mean that a bank may not have to pay corporate tax in the future, mostly because a bank lost money, so potential tax liabilities can be netted. The argument for deducting DTAs for capital calculation purposes is that DTAs represent somewaht uncertain assets as it is unclear if and when their benefits can be reaped - this requires profits. The treatment for Basel III is similar for other intangible assets, notably Goodwill.

Greek banks with huge past losses have normally accummulated sizeable DTAs. As the world is moving towards Basel III and the banks had to undergo the ECB stress, banks looked for ways to turn their DTAs into non-deductible assets and that is what this filing is about.

The purpose is to turn DTAs into tax credits (DTCs) which are directly enforceable against the Greek state. As opposed to DTAs, DTCs can also be used if a bank makes a loss in which case the Greek government makes a payment to the bank. The condition of the Greek state for making the payment is that it receives conversion rights which can be converted into common shares. Unfortunately the precise economics of the conversion rights are not outlined.

Note that the topic is crucial for Eurobank as it makes a difference in their Basel III capital ratio from 6% to 12%. This capital boost is paid for by a potential dilution. Also, you may argue that claims against the Greek Government should not be capital. However, DTA/DTC laws have been passed across Southern Europe in order to address the capital shortage.

LT

In case you want to read further:
http://www.wsj.com/articles/ecb-should-stop-southern-european-games-with-bank-capital-heard-on-the-street-1413198242 (http://www.wsj.com/articles/ecb-should-stop-southern-european-games-with-bank-capital-heard-on-the-street-1413198242)
http://www.reuters.com/article/2014/10/09/us-greece-banks-eba-idUSKCN0HY0SE20141009 (http://www.reuters.com/article/2014/10/09/us-greece-banks-eba-idUSKCN0HY0SE20141009)
Title: Re: EGFEY - Eurobank
Post by: peter1234 on February 27, 2015, 05:04:38 AM
Thank you for your explanations. Learned something new today.
 ;)
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 27, 2015, 10:43:30 AM
Anyone able to understand what was voted on at the General Meeting in November? I've read through this a few times but still can't make heads nor tails of the special reserve that is being created with rights to buy common shares on behalf of the Greek State that is somehow related to DTAs and DTCs.....

http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf (http://www.eurobank.gr/Uploads/pdf/SHAREHOLDER_BINDER_EGM_07112014_ENG_(FINAL).pdf)

Not sure if I get all the details right, but can give some context:

Under the Basel III framework, DTAs are deducted when it comes to assessing a banks capital. DTAs mean that a bank may not have to pay corporate tax in the future, mostly because a bank lost money, so potential tax liabilities can be netted. The argument for deducting DTAs for capital calculation purposes is that DTAs represent somewaht uncertain assets as it is unclear if and when their benefits can be reaped - this requires profits. The treatment for Basel III is similar for other intangible assets, notably Goodwill.

Greek banks with huge past losses have normally accummulated sizeable DTAs. As the world is moving towards Basel III and the banks had to undergo the ECB stress, banks looked for ways to turn their DTAs into non-deductible assets and that is what this filing is about.

The purpose is to turn DTAs into tax credits (DTCs) which are directly enforceable against the Greek state. As opposed to DTAs, DTCs can also be used if a bank makes a loss in which case the Greek government makes a payment to the bank. The condition of the Greek state for making the payment is that it receives conversion rights which can be converted into common shares. Unfortunately the precise economics of the conversion rights are not outlined.

Note that the topic is crucial for Eurobank as it makes a difference in their Basel III capital ratio from 6% to 12%. This capital boost is paid for by a potential dilution. Also, you may argue that claims against the Greek Government should not be capital. However, DTA/DTC laws have been passed across Southern Europe in order to address the capital shortage.

LT

In case you want to read further:
http://www.wsj.com/articles/ecb-should-stop-southern-european-games-with-bank-capital-heard-on-the-street-1413198242 (http://www.wsj.com/articles/ecb-should-stop-southern-european-games-with-bank-capital-heard-on-the-street-1413198242)
http://www.reuters.com/article/2014/10/09/us-greece-banks-eba-idUSKCN0HY0SE20141009 (http://www.reuters.com/article/2014/10/09/us-greece-banks-eba-idUSKCN0HY0SE20141009)

That makes a lot more sense. I had kind of pieced together the DTA and DTC portion but had no idea what the warrants were for. Thanks a lot for your input.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 13, 2015, 07:48:29 AM
There's no such thing as a floor for this stock is there? Sheesh!
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 13, 2015, 12:58:44 PM
There's no such thing as a floor for this stock is there? Sheesh!

What's your cost basis on this? I've been watching since 2 years ago but always thought the price does not justify the risk. Who would pay 60% of common tangible equity for a bank with a texas ratio of 110?

It might be interesting to me now. :)
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 18, 2015, 07:48:53 AM
There's no such thing as a floor for this stock is there? Sheesh!

What's your cost basis on this? I've been watching since 2 years ago but always thought the price does not justify the risk. Who would pay 60% of common tangible equity for a bank with a texas ratio of 110?

It might be interesting to me now. :)

I haven't worked out exactly what it is per share as I've had multiple purchases. I started at $0.09 and continued buying all the way down to $0.06 so it's probably somewhere around $0.07-0.075. Looking to add a small bit more if it goes below $0.05 but at that point I think I'll be done and will play the wait and see game with how things turn out.

Full year 2014 results for those who missed it last Wednesday.
http://www.eurobank.gr/Uploads/pdf/deltiotipou_apotelesmata_2014en.pdf  (http://www.eurobank.gr/Uploads/pdf/deltiotipou_apotelesmata_2014en.pdf)
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 18, 2015, 08:35:34 AM
There's no such thing as a floor for this stock is there? Sheesh!

What's your cost basis on this? I've been watching since 2 years ago but always thought the price does not justify the risk. Who would pay 60% of common tangible equity for a bank with a texas ratio of 110?

It might be interesting to me now. :)

I haven't worked out exactly what it is per share as I've had multiple purchases. I started at $0.09 and continued buying all the way down to $0.06 so it's probably somewhere around $0.07-0.075. Looking to add a small bit more if it goes below $0.05 but at that point I think I'll be done and will play the wait and see game with how things turn out.

Full year 2014 results for those who missed it last Wednesday.
http://www.eurobank.gr/Uploads/pdf/deltiotipou_apotelesmata_2014en.pdf  (http://www.eurobank.gr/Uploads/pdf/deltiotipou_apotelesmata_2014en.pdf)

So they are projecting 2015 returning to profitability.
1. I am very impressed with their growth of pre-provision income.
2. I am still not sure why they posted Credit Loss Provisions of 742M in Q4. Normally, if they think the credit provision is insufficient, they will post a huge provision at once and "return to profitability" in one quarter. But here they are slowly increasing the posting of credit loss provisions quarter after quarter, which seems like a slow recognition that the previous prevision are insufficient? I wish I could project when this could end.
3. With 9.7bn allowance for loan losses and nearly 18 bn of bad loans, you have to be pretty accurate in your estimates for the actual loan loss recovery. The equity is only 6.3 bn. Let's say you actually found out that you need 12 bn allowance, then the equity is reduced to 4.3 bn right away and that would cause regulators to kick in and force another capital increase. However with 200 m per quarter pre-provision income, time is their friend, so if they actually need 12 bn allowance and they just slowly increase the provision for loan losses each quarter, they should be fine.

Therefore I am thinking that the actual allowance needed is far more than 9.7 bn and they could not afford to have a one time big provision to put the problems behind. Therefore we could see more quarters reporting losses.

However this does not mean the stock price would keep dropping. I have no ability to predict that, but I am watching aside. :)
Title: Re: EGFEY - Eurobank
Post by: cameronfen on March 18, 2015, 11:30:00 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released. 
Title: Re: EGFEY - Eurobank
Post by: A_Hamilton on March 18, 2015, 11:50:40 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

Greek GDP is down 25% since the onset of the financial crisis, in the U.S. GDP declined by ~5% at the depths of the crisis. It is 4-6x worse. Eurobank is basically a good bank/bad bank structure you hope there is a closed end fund trading at a discount in conservative marks on NPA's, and then a hope that they can write new loans with conservative underwriting and wide spreads...of course instability of deposits can blow a hole through all of this.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 18, 2015, 12:25:59 PM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

I would definitely say what Greece is going through is worse, but hard to say how much worse.

That being said, it also has an insurance division which brings in sizable income/revenue. I think this is part of the reason they looked at too. Wilbur Ross mentioned on multiple occasions that part of the reason he had been interested in Bank of Ireland is because of their massive non-bank businesses that were extremely valuable that had been the proverbial "baby in the bathwater." A Grexit would be a bad outcome that would shatter the investment thesis for either, but beyond the Grexit you have a very valuable insurance operation and their ownership stake in Eurobank/Grivalia properties (valued somewhere around $250M).

Title: Re: EGFEY - Eurobank
Post by: cameronfen on March 18, 2015, 01:31:03 PM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

I would definitely say what Greece is going through is worse, but hard to say how much worse.

That being said, it also has an insurance division which brings in sizable income/revenue. I think this is part of the reason they looked at too. Wilbur Ross mentioned on multiple occasions that part of the reason he had been interested in Bank of Ireland is because of their massive non-bank businesses that were extremely valuable that had been the proverbial "baby in the bathwater." A Grexit would be a bad outcome that would shatter the investment thesis for either, but beyond the Grexit you have a very valuable insurance operation and their ownership stake in Eurobank/Grivalia properties (valued somewhere around $250M).



and

It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

Greek GDP is down 25% since the onset of the financial crisis, in the U.S. GDP declined by ~5% at the depths of the crisis. It is 4-6x worse. Eurobank is basically a good bank/bad bank structure you hope there is a closed end fund trading at a discount in conservative marks on NPA's, and then a hope that they can write new loans with conservative underwriting and wide spreads...of course instability of deposits can blow a hole through all of this.

I agree with all the points from above.  I didn't even think about looking at GDP which would be the smart thing to do with regards to the crisis.  Since this has been a crisis in slow motion since 2007 though a lot of the loans have already gone through the system.  Either way though the magnitude of the situation is significantly worse, I agree.  I think though, from my observations, and this might be my own biases at work, but whenever both sides are incentivized to avoid a scenario, ie the Grexit, even if there is some postering and chicken playing going around, usually saner heads prevail.  Think about the debt ceiling crisis or the cuban missile crisis. I can't think of any other situations but I also can't think of one situation where both sides wanted to avoid a terrible situation and they postured too much and neither side caved in and the calamity occured.  Can anyone else? 
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 18, 2015, 01:56:22 PM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

I would definitely say what Greece is going through is worse, but hard to say how much worse.

That being said, it also has an insurance division which brings in sizable income/revenue. I think this is part of the reason they looked at too. Wilbur Ross mentioned on multiple occasions that part of the reason he had been interested in Bank of Ireland is because of their massive non-bank businesses that were extremely valuable that had been the proverbial "baby in the bathwater." A Grexit would be a bad outcome that would shatter the investment thesis for either, but beyond the Grexit you have a very valuable insurance operation and their ownership stake in Eurobank/Grivalia properties (valued somewhere around $250M).



and

It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

Greek GDP is down 25% since the onset of the financial crisis, in the U.S. GDP declined by ~5% at the depths of the crisis. It is 4-6x worse. Eurobank is basically a good bank/bad bank structure you hope there is a closed end fund trading at a discount in conservative marks on NPA's, and then a hope that they can write new loans with conservative underwriting and wide spreads...of course instability of deposits can blow a hole through all of this.

I agree with all the points from above.  I didn't even think about looking at GDP which would be the smart thing to do with regards to the crisis.  Since this has been a crisis in slow motion since 2007 though a lot of the loans have already gone through the system.  Either way though the magnitude of the situation is significantly worse, I agree.  I think though, from my observations, and this might be my own biases at work, but whenever both sides are incentivized to avoid a scenario, ie the Grexit, even if there is some postering and chicken playing going around, usually saner heads prevail.  Think about the debt ceiling crisis or the cuban missile crisis. I can't think of any other situations but I also can't think of one situation where both sides wanted to avoid a terrible situation and they postured too much and neither side caved in and the calamity occured.  Can anyone else?

If you're familiar with Game Theory, this is called a Nash equilibrium. It takes a slightly different approach to free markets than did Adam Smith and suggests that there are situations where individuals pursuing their self interest opt for non-optimal solutions because of the uncertainty of how their counterpart may react. See the Prisoner's dilemma for an example. http://en.wikipedia.org/wiki/Prisoner%27s_dilemma (http://en.wikipedia.org/wiki/Prisoner%27s_dilemma)

I don't think that's what we have here though. I still think that all parties involved have a very large incentive to push for a compromise regardless of what the other party decides to do given the consequences to Greece and the future implications for the Euro area if a Grexit occurred.



Title: Re: EGFEY - Eurobank
Post by: muscleman on March 18, 2015, 04:33:00 PM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

ALLL to total loan ratio is NOT a good way to measure the conservativeness. Suppose you have 20% ALLL but 100% of your loans are bad loans, does that sound conservative?
Texas ratio is better. At a minimum you should use ALLL to bad loans ratio.
Title: Re: EGFEY - Eurobank
Post by: cameronfen on March 19, 2015, 08:01:35 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

ALLL to total loan ratio is NOT a good way to measure the conservativeness. Suppose you have 20% ALLL but 100% of your loans are bad loans, does that sound conservative?
Texas ratio is better. At a minimum you should use ALLL to bad loans ratio.


So actually I agree with you, but I'm not actually trying to measure how risky the bank is, for that ALL to bad loans is a good ratio better than the one I'm using, but I'm trying to get a better idea of how conservative the company's NPA process is, which sort of gets at how risky the bank is on a second order.  Now if I remember correctly, NPA for eurobank is twice as large as ALL.  So NPA is 40% of total loans.  What I'm trying to say is that that is a incredibly high number.  Do you think on a dollar weighted basis, 4 of every 10 loans will fail.  Compare that to BAC where NPA to total loans was 4.5% even in the midst of the financial crisis.  That is an extremely high number and sounds to me like the bank is being quite conservative in writing a loan down as an NPA.  The argument that GDP has fallen 25% is a legitimate counterpoint though.  At least in my mind.  Perhaps I should of used NPA to total loans, though.  It illustrates the point better.   
Title: Re: EGFEY - Eurobank
Post by: tombgrt on March 19, 2015, 08:20:23 AM
Important to note is that Watsa and others made the investment in early 2014 when GDP growth expectancy for 2015 and beyond was 3%+/year. That would have quickly reversed the trend of the last few years. I doubt that they are equally comfortable in their bets now.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 19, 2015, 08:48:44 AM
Important to note is that Watsa and others made the investment in early 2014 when GDP growth expectancy for 2015 and beyond was 3%+/year. That would have quickly reversed the trend of the last few years. I doubt that they are equally comfortable in their bets now.

I don't think Watsa and Ross gave any consideration to what the expected GDP growth for the next year would be. They generally tend to invest with a much longer time horizon, and a much wider latitude for error than missing GDP expectations for a single year would suggest. Ross even recently said that the price was extremely attractive but he wasn't going to consider adding until the  FY2014 results were filed. That was last Wednesday. Watsa has been betting on deflation in the Euro area so I think he'd probably have argued that 3% was far too optimistic to begin with and is certainly not concerned that the inflated target for a single year wasmissed.

Let's be realistic here - nothing much has changed in Greece over the last 6 months except the new government in charge. This new government is posturing and stirring the pot to try get a more favorable outcome than those currently demanded by the Troika and the Troika wants more viable alternatives than what has currently been given. Neither side wants a Grexit, neither side is discussing a Grexit, and yet, because of the sensationalization that has occurred, the stock has dropped 80% on fears of a Grexit and the resulting impact that would have on banks.

I can't say that a Grexit won't occur, but I can say that I think the odds are small with neither party in favor of it. You have the opportunity to buy a profitable insurance company, 20% ownership in a profitable real estate company, and direct ownership in what will likely end up being an extremely profitable bank in Greece for a price that is less than 25% of what is arguable a conservative measure of what equity is. This seems like a steal to me - not a riskless investment, but a steal nonetheless.
Title: Re: EGFEY - Eurobank
Post by: morningstar on March 19, 2015, 09:02:51 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

ALLL to total loan ratio is NOT a good way to measure the conservativeness. Suppose you have 20% ALLL but 100% of your loans are bad loans, does that sound conservative?
Texas ratio is better. At a minimum you should use ALLL to bad loans ratio.


So actually I agree with you, but I'm not actually trying to measure how risky the bank is, for that ALL to bad loans is a good ratio better than the one I'm using, but I'm trying to get a better idea of how conservative the company's NPA process is, which sort of gets at how risky the bank is on a second order.  Now if I remember correctly, NPA for eurobank is twice as large as ALL.  So NPA is 40% of total loans.  What I'm trying to say is that that is a incredibly high number.  Do you think on a dollar weighted basis, 4 of every 10 loans will fail.  Compare that to BAC where NPA to total loans was 4.5% even in the midst of the financial crisis.  That is an extremely high number and sounds to me like the bank is being quite conservative in writing a loan down as an NPA.  The argument that GDP has fallen 25% is a legitimate counterpoint though.  At least in my mind.  Perhaps I should of used NPA to total loans, though.  It illustrates the point better.   

About 1/3 of the portfolio is 90 days past due. The high NPA number doesn't reflect any form of conservatism, but rather the terrible state of the portfolio. The level of conservatism can be better seen in how rapidly the bank realizes losses on loans that stop performing. I don't think Eurobank is showing very impressively in that regard at around 50% coverage. Though NPA formation seems to be slowing (absent Grexit) there are many quarters ahead of provisions running higher than new NPA formation as the bank realizes its losses.

Ultimately portfolio quality might not be very relevant to the performance of this stock though, as the equity seems to be pricing-to-survival now w/ 2018 notes yielding 20+%. If we get to 2018 and the equity hasn't suffered massive dilution or a wipeout, it's bound to be trading much higher.
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 19, 2015, 09:32:28 AM
I did some comparisons between Piraeus bank, Alpha bank and Eurobank. Please let me know if I made any mistakes.
1. The market cap:
Piraeus bank:
http://www.piraeusbankgroup.com/en/investors/share/shareholder-structure
The Hellenic Financial Stability Fund held 67% of the outstanding common shares (6,101,979,715 of a nominal value €0.30 each)  This means total common shares are about 9.5 bn.
Every HFSF Warrant incorporates the holder's right to purchase 4.47577327722 shares owned by the Hellenic Financial Stability Fund ('HFSF').The issued warrants that are currently traded are 843,637,022.
This means there are additional 3 bn shares if the warrants are exercised. What's the strike price? I can't find it.
Current stock price is 0.355, so market cap is 3.37 bn. However on this link it says it is 2.1 bn. Why?
http://www.piraeusbankgroup.com/en/investors/share/share-interactive-chart


Alpha bank:
http://www.alpha.gr/page/default.asp?la=2&id=548
Alpha Bank shareholders excluding the HFSF hold 4,310,200,279 voting shares of the Bank. On top of the above, the HFSF holds 8,458,859,579 common, registered, voting, dematerialized shares, which correspond to 66.24% of the total number of voting shares of the Bank. The exercise of voting rights of HFSF shares is subject to restrictions according to Article 7a of L.3864/2010.
In addition, shareholders hold 1,141,747,967 Warrants, each incorporating the right of its holder to purchase 7.408683070 New Shares owned by the HFSF

So the warrants look to be different from what I understand as warrants in the US. When exercised, no new warrants are issued. They just buy from HFSF. Therefore the total share count or the bank's book value won't change.
Therefore we can ignore the effects of warrant exercise here, and the total market cap should be 13 bn shares x 0.4 = 5.2 bn



Eurobank:
http://www.eurobank.gr/online/home/generic.aspx?id=23&mid=353&lang=en
Weird that there is no mention of HFSF here. Total Outstanding Number of Common Shares   14,707,876,542. Stock price is 0.085 per share as of today. Total market cap is 1.25 bn euro.


The common tangible equity are 7.6, 8 and 4.4 bn each for the above banks. Eurobank trades at the deepest discount right now.


All three banks have about the same texas ratio. 110.

Did I make any mistake here? I thought market would be efficient and they should trade at similar discounts to book, but they are quite different.
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 19, 2015, 09:44:03 AM
Here are some interesting articles about David Einhorn's thoughts on Piraeus bank.
It sounds like when the stock price was 1.5 Euro, he said the p/b ratio was 0.75, so that means I was probably wrong when I calculated the p/b ratio in the above post. Please let me know where I am wrong.

http://www.valuewalk.com/2014/11/david-einhorn-piraeus-bank-warrants/
http://viennacapitalist.com/2014/11/12/david-einhorn-on-piraeus-bank-now-i-know-what-he-thinks-part-ii/

Title: Re: EGFEY - Eurobank
Post by: cameronfen on March 19, 2015, 10:46:16 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

ALLL to total loan ratio is NOT a good way to measure the conservativeness. Suppose you have 20% ALLL but 100% of your loans are bad loans, does that sound conservative?
Texas ratio is better. At a minimum you should use ALLL to bad loans ratio.


So actually I agree with you, but I'm not actually trying to measure how risky the bank is, for that ALL to bad loans is a good ratio better than the one I'm using, but I'm trying to get a better idea of how conservative the company's NPA process is, which sort of gets at how risky the bank is on a second order.  Now if I remember correctly, NPA for eurobank is twice as large as ALL.  So NPA is 40% of total loans.  What I'm trying to say is that that is a incredibly high number.  Do you think on a dollar weighted basis, 4 of every 10 loans will fail.  Compare that to BAC where NPA to total loans was 4.5% even in the midst of the financial crisis.  That is an extremely high number and sounds to me like the bank is being quite conservative in writing a loan down as an NPA.  The argument that GDP has fallen 25% is a legitimate counterpoint though.  At least in my mind.  Perhaps I should of used NPA to total loans, though.  It illustrates the point better.   

About 1/3 of the portfolio is 90 days past due. The high NPA number doesn't reflect any form of conservatism, but rather the terrible state of the portfolio. The level of conservatism can be better seen in how rapidly the bank realizes losses on loans that stop performing. I don't think Eurobank is showing very impressively in that regard at around 50% coverage. Though NPA formation seems to be slowing (absent Grexit) there are many quarters ahead of provisions running higher than new NPA formation as the bank realizes its losses.

Ultimately portfolio quality might not be very relevant to the performance of this stock though, as the equity seems to be pricing-to-survival now w/ 2018 notes yielding 20+%. If we get to 2018 and the equity hasn't suffered massive dilution or a wipeout, it's bound to be trading much higher.

I have to admit I didn't check the delinquencies and the distribution of the NPA.  I just looked at Eurobank quite quickly and the high NPA to loan ratio was what jumped at me.  I just wanted to illustrate what jumped out at me so people could chew it over, and chew at it everyone did.  I took a look at NPAs and based on how much collateral they have I think now they probably will have to raise more capital in the future (although there lack of loan charge offs is the one data point that contradicts this, but assuming and looking at NPA data and all the loans 365 days past due it looks like management is overly hesitant to charge off loans perhaps because this would make the company look really bad).  Anyway, I looked at the NPAs.  Based on the amount of impaired debt, I created an estimated amount that Eurobank would owe above and beyond their ALL.  I also took into account some of their impaired debt would be collateralized and so I subtracted an estimated collateralized amount from total impairments (I assumed that impaired debt would be less collateralized than the average debt by an subtractive factor of .3 in the base rate but I included a sensitivity table).  I then tallied up what remained , which assumes that collection on any debt not collateralized is 0 (What is a good base rate for collecting on unsecured debt?  This is probably too conservative but I do not know.  You should be able to collect something on the Corporate and SME unsecured debt which is about 50% of additional impaired loans that are necessary to collect).  The results of this analysis suggests that the company has somewhere around 3.7 billion euros that need to be made up through a combination of loans becoming performing repayment and unsecured liens that collect something in the process of bankruptcy.  Based on 2013s impairment reversals and repayment it would take about 6 years for this whole to be reversed, which is probably suggests that much of this 3.7 billion euros will have to be written down.  I don't really know anything about bankruptcy and how much unsecured creditors typically recover, but does anyone else?  Loans are typically more senior than bonds right, but in Europe companies have a lot less bonds. 

Here is my excel let me know if you can follow.  I would be interested if people that know more about bankruptcy could add unto it. 
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 19, 2015, 04:48:19 PM
I did some comparisons between Piraeus bank, Alpha bank and Eurobank. Please let me know if I made any mistakes.
1. The market cap:
Piraeus bank:
http://www.piraeusbankgroup.com/en/investors/share/shareholder-structure
The Hellenic Financial Stability Fund held 67% of the outstanding common shares (6,101,979,715 of a nominal value €0.30 each)  This means total common shares are about 9.5 bn.
Every HFSF Warrant incorporates the holder's right to purchase 4.47577327722 shares owned by the Hellenic Financial Stability Fund ('HFSF').The issued warrants that are currently traded are 843,637,022.
This means there are additional 3 bn shares if the warrants are exercised. What's the strike price? I can't find it.
Current stock price is 0.355, so market cap is 3.37 bn. However on this link it says it is 2.1 bn. Why?
http://www.piraeusbankgroup.com/en/investors/share/share-interactive-chart


Alpha bank:
http://www.alpha.gr/page/default.asp?la=2&id=548
Alpha Bank shareholders excluding the HFSF hold 4,310,200,279 voting shares of the Bank. On top of the above, the HFSF holds 8,458,859,579 common, registered, voting, dematerialized shares, which correspond to 66.24% of the total number of voting shares of the Bank. The exercise of voting rights of HFSF shares is subject to restrictions according to Article 7a of L.3864/2010.
In addition, shareholders hold 1,141,747,967 Warrants, each incorporating the right of its holder to purchase 7.408683070 New Shares owned by the HFSF

So the warrants look to be different from what I understand as warrants in the US. When exercised, no new warrants are issued. They just buy from HFSF. Therefore the total share count or the bank's book value won't change.
Therefore we can ignore the effects of warrant exercise here, and the total market cap should be 13 bn shares x 0.4 = 5.2 bn



Eurobank:
http://www.eurobank.gr/online/home/generic.aspx?id=23&mid=353&lang=en
Weird that there is no mention of HFSF here. Total Outstanding Number of Common Shares   14,707,876,542. Stock price is 0.085 per share as of today. Total market cap is 1.25 bn euro.


The common tangible equity are 7.6, 8 and 4.4 bn each for the above banks. Eurobank trades at the deepest discount right now.


All three banks have about the same texas ratio. 110.

Did I make any mistake here? I thought market would be efficient and they should trade at similar discounts to book, but they are quite different.

Can someone kindly answer my question about the book value of piraeus, Alpha and Eurobanks please?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 20, 2015, 06:52:39 AM
It could be that Eurobank is very conservative in it's recognition of problem loans.  The Allowance for Loan Losses (ALL) to total loans ratio is almost 20%.  To put that in perspective, BAC the worst US bank in the depths of the financial crisis had a ratio of 3-4.5% in 2007-2009.  I think (but don't know for sure, I didn't feel like wading through 5 years of press releases) that even BAC's ALL ended up being too conservative and they released some of it.  So unless you think the Greek crisis is like 4-6 times worse than the financial crisis, the company's loan losses book should be ok.  Furthermore, at Eurobank net charge offs to loan impairment charges is something like 1 to 3 with loan impairment charges being the larger number.  BAC over the past 7 years has never had a ratio higher than 1.5.  This is probably why Watsa and Ross are interested in the company at .8 of book.  It doesn't look all that attractive if you only look at book, but if you look at how conservative the loan loss book is, there is a lot of room for those losses to be released.

ALLL to total loan ratio is NOT a good way to measure the conservativeness. Suppose you have 20% ALLL but 100% of your loans are bad loans, does that sound conservative?
Texas ratio is better. At a minimum you should use ALLL to bad loans ratio.


So actually I agree with you, but I'm not actually trying to measure how risky the bank is, for that ALL to bad loans is a good ratio better than the one I'm using, but I'm trying to get a better idea of how conservative the company's NPA process is, which sort of gets at how risky the bank is on a second order.  Now if I remember correctly, NPA for eurobank is twice as large as ALL.  So NPA is 40% of total loans.  What I'm trying to say is that that is a incredibly high number.  Do you think on a dollar weighted basis, 4 of every 10 loans will fail.  Compare that to BAC where NPA to total loans was 4.5% even in the midst of the financial crisis.  That is an extremely high number and sounds to me like the bank is being quite conservative in writing a loan down as an NPA.  The argument that GDP has fallen 25% is a legitimate counterpoint though.  At least in my mind.  Perhaps I should of used NPA to total loans, though.  It illustrates the point better.   

About 1/3 of the portfolio is 90 days past due. The high NPA number doesn't reflect any form of conservatism, but rather the terrible state of the portfolio. The level of conservatism can be better seen in how rapidly the bank realizes losses on loans that stop performing. I don't think Eurobank is showing very impressively in that regard at around 50% coverage. Though NPA formation seems to be slowing (absent Grexit) there are many quarters ahead of provisions running higher than new NPA formation as the bank realizes its losses.

Ultimately portfolio quality might not be very relevant to the performance of this stock though, as the equity seems to be pricing-to-survival now w/ 2018 notes yielding 20+%. If we get to 2018 and the equity hasn't suffered massive dilution or a wipeout, it's bound to be trading much higher.

I went home, re-read through Q3 and Q4 reports, and did some number crunching and chewed on it a bit. The company has a loan portfolio of around 51B. Of this loan portfolio, 17.3B are non-performing assets that are 90 days past due. That being said, there has also been a moratorium on foreclosures that was passed in 2013 - it was supposed to end at the end of 2014; however, the new government has publicly announced that they intend to continue with the policy so banks probably aren't  foreclosing on individuals in the interim to avoid political ire and because they were also pushing for the extension. 

I'm sure that there are a large number of individuals who have no ability to pay and that this law is protecting them from being homeless. I'm also sure that there are a large number of individuals who jumped on the chance to not pay a mortgage and have absolutely no consequence for doing so. The banks favor extending the moratorium because if it immediately ended, they'd have to write off the loans from those unable to pay and sell a bunch of collateral (houses) to get their cash back. This would probably force the prices of houses even lower forcing the banks to write down the collateral value against their good loans as well and risk ending up with a billions in a capital shortfall again. The banks would rather take this slowly, extend the moratorium, and work on getting individual cases of borrowers who have the ability to pay to begin paying again.

We can see this in Piraeus bank - they offered a number of their non-performing borrowers 30-50% haircuts on their debt if they started paying again and half of them became performing loans again! I would guess that about half of that 17.3B at Eurobank also have the ability to perform but have no incentive because they're not going to lose their house if they don't pay. If we assume this is correct, and we assume that Eurobank offers similar terms (averaging it out at 40% haircut which is pretty extreme for collateralized loans), then Eurobank could write off 3.5B against their 9.7B in reserves and immediately start collecting on some of these loans.

The math is as follows:
(17.3 * 0.5) = 8.56B <- this is the amount of loans that could potential be performing if Piraeus' experience is representative of Eurobank as well.
8.65*0.4 = 3.46B <- this is the amount that Eurobank would write off against 9.7B in reserves
8.65 - 3.46 = 5.19B <- the amount that Eurobank would immediately start collecting on again.
5.19 * 0.04 = .2076 <- 207.6M in additional income straight to the bottom line. The 4% is my estimate of what loans are currently paying based on the current NIM relative to current loan book, portfolio, and Piraeus' presentation on deposit rates in Greece. Interest expense doesn't need to be deducted from this 4% because the interest on the deposits paid is already included in currently reported figures. This would be additional income with no additional expense beyond the initial write off.

What you have left is a firm that is currently bringing in about 1.75B per year in NII (or about 2B in gross pre-provision income including insurance and income from investments) and reserves would be 6.25B against NPAs of 8.56B (a coverage ratio of 73%) which is still assuming extremely high charge-offs of the remaining non-performing assets. Considering operating expenses and you'd have a bank pulling in about $1B a year pre-provisions. If those earnings are retained, or are written off as loan loss provisions, you have a company that is recapping itself at 700M-1B per year depending on what rate charge offs would continue after the write off.

Obviously the 3.5B write off would affect capital ratios. After all, the company had Tier 1 equity of 5.9B which is 15% of Risk Weighted Assets. A write off of 3.5B would reduce both the numerator (5.9) and the denominator (total RWA) though it's hard for me to guess the affects on the final ratio without knowing the profile of those mortgages and how they are weighted in the RWA calculation. It seems possible that this write off could occur and the bank could still be around 7-8% or so on a Tier 1 ratio while recapping itself and adding an additional 3% points to that 7-8% every year. It would only take 2 years for them to get back to a 15% ratio (due to the lower RWA) with a better loan profile, reserving, and NPA ratios.

My real concern is their inability to use more than 20% of their tax assets as capital without taking on dilution. They have a significant piece of their capital in DTA (3+B) and these will likely need to be replaced by a better source of capital in the future as it is my understanding the allowance to use them is slowly being phased out. The scenario laid out above doesn't take into account needing to replace these assets with better forms of capital - any positive earnings would simply have an offsetting affect as the cash growth on the balance sheet would offset the decrease in DTAs. We may still have a 3B capital shortfall if my understanding is correct and nothing is done to take care of these.

It seems that this could be solved without major dilution at that point though. The issuance of preferred shares and debt could fill the majority of the whole. 3B in total issuance would result in interest/dividend charges that would be extremely reasonable relative to the 2B in pre-provision income.

Can anyone who is knowledgeable about banking comment on any of the above? There's a lot here that I'm uncertain about, especially the affect of the write off on Tier 1 ratio and capital phase out of the DTAs, so any input would be much appreciated.
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 20, 2015, 07:41:40 AM
Hmm... That's probably why Piraeus bank had a 1.7 bn provision in 2014Q3 and claimed that they have a "clean slate" again.
I looked at all 3 major banks and their new 90dpd formation have steadily decreased. Piraeus bank's formation has dropped to 0 in 2014Q4 probably because they now have a "clean slate". But they still reported an loan loss impairment charge of over 400 million. Why is that? Is that based on historical default rates?

In terms of your math, I think you are talking about mortgages specifically?
http://www.eurobank.gr/Uploads/pdf/4Q2014%20Results%20Presentation.pdf

See page 19. There is 4.1 bn mortgages nonperforming. Maybe your math should be based on that instead of the total NPLs?
I am also concerned about the 0-89dpd disclosure on this page. It has not been disclosed in previous quarters. This figure is 2.1 bn, and it will become the next quarter's new 90 dpd formation. Why do they only have new 90 dpd formation of about 280 m per quarter? Either most of the 0-89 dpd magically starts performing again, or they charged them off before they become 90 dpd, which may explain why the loan impairment costs is so high?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 20, 2015, 08:02:41 AM
Hmm... That's probably why Piraeus bank had a 1.7 bn provision in 2014Q3 and claimed that they have a "clean slate" again.
I looked at all 3 major banks and their new 90dpd formation have steadily decreased. Piraeus bank's formation has dropped to 0 in 2014Q4 probably because they now have a "clean slate". But they still reported an loan loss impairment charge of over 400 million. Why is that? Is that based on historical default rates?

In terms of your math, I think you are talking about mortgages specifically?
http://www.eurobank.gr/Uploads/pdf/4Q2014%20Results%20Presentation.pdf

See page 19. There is 4.1 bn mortgages nonperforming. Maybe your math should be based on that instead of the total NPLs?
I am also concerned about the 0-89dpd disclosure on this page. It has not been disclosed in previous quarters. This figure is 2.1 bn, and it will become the next quarter's new 90 dpd formation. Why do they only have new 90 dpd formation of about 280 m per quarter? Either most of the 0-89 dpd magically starts performing again, or they charged them off before they become 90 dpd, which may explain why the loan impairment costs is so high?

When a someone misses a payment the loan goes into the 0-89 dpd bucket. The moment they make a payment, they come out of that bucket again, even if they aren't fully caught up on payments. What this means is that they have 2B of people who have missed at least 1 payment in the last quarter, but as long as they make 1 payment in the next quarter they'll never make it to the 90dpd bucket. This will certainly be a metric to watch first as its likely that these figures will shrink in a recovery long before the 90dpd will.

As to your point about mortgages, I think restructurings like this would have the biggest impact on mortgages due to the moratorium, but I certainly think loan modification and reduction to begin timely payments again could also be used for other types of loans. I simply think the rate of success will be less. I'm not entirely certain if Piraeus only offered this deal to homeowners or if it was to a broader group to really know how to apply it.
Title: Re: EGFEY - Eurobank
Post by: constructive on March 20, 2015, 09:52:44 AM
Let's be realistic here - nothing much has changed in Greece over the last 6 months except the new government in charge.

Which was accompanied by massive capital flight from Greek banks (>$28B), a spike in Greek corporate borrowing rates, and economic slowdown.

The damage done to the Greek economy over the last 6 months was quite unnecessary, since the government's hard negotiating line evaporated once they saw the market's reaction and they caved to most of ECB's requirements.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on March 20, 2015, 10:23:41 AM
Let's be realistic here - nothing much has changed in Greece over the last 6 months except the new government in charge.

Which was accompanied by massive capital flight from Greek banks (>$28B), a spike in Greek corporate borrowing rates, and economic slowdown.

The damage done to the Greek economy over the last 6 months was quite unnecessary, since the government's hard negotiating line evaporated once they saw the market's reaction and they caved to most of ECB's requirements.

Exactly. They obviously don't just look at the next year or two, but you can bet that they made the investment because they think they worst lies in the past for Greece. Them having a long term view doesn't mean they don't look at the present.
They aren't buying into it assuming the economy might flatline another 5 years just to maybe come out on top in 15-20 years. In that case wouldn't there be safer bets than banks (after all being levered plays on the economy)?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on April 06, 2015, 12:50:34 PM
http://www.zerohedge.com/news/2015-04-06/valuing-greek-banks-sum-parts-approach (http://www.zerohedge.com/news/2015-04-06/valuing-greek-banks-sum-parts-approach)

Haven't had time to really think through this and digest it myself, but it's an argument for Eurobank being richly valued at present levels.
Title: Re: EGFEY - Eurobank
Post by: muscleman on April 07, 2015, 10:42:01 AM
http://www.zerohedge.com/news/2015-04-06/valuing-greek-banks-sum-parts-approach (http://www.zerohedge.com/news/2015-04-06/valuing-greek-banks-sum-parts-approach)

Haven't had time to really think through this and digest it myself, but it's an argument for Eurobank being richly valued at present levels.

Where did it say it's richly valued right now? I don't see that.
I can't understand most of the discussions here though. He mentioned Eurobank's largest RMBS issue trading at 78 cents and the bank can buy back it to book a profit. Then what? How does this affect valuation?
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on April 12, 2015, 07:46:48 PM
That dude's article is total BS. I remember a similar piece that came out about MBIA and its Zohar exposure. Was complete nonsense.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on April 12, 2015, 08:01:03 PM
http://www.eurobank.gr/Uploads/pdf/Eurobank_ECB_comprehensive_assessment_Final.pdf
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on April 16, 2015, 02:51:59 PM
https://www.youtube.com/watch?feature=player_embedded&v=fhyVcB_3j2s (https://www.youtube.com/watch?feature=player_embedded&v=fhyVcB_3j2s)

Worth a watch just to get an idea of Greece's view on things. Long video though.
Title: Re: EGFEY - Eurobank
Post by: Phoenix01 on April 16, 2015, 03:11:56 PM
Prem stated that Eurobank would be in trouble if Greece were to exit the Euro.  It is a risk that you need to take into consideration.
Title: Re: EGFEY - Eurobank
Post by: VersaillesinNY on April 18, 2015, 07:55:51 AM
Fokion Karavias, Chief Executive Officer, Eurobank Ergasias, Athens, Greece

Topic: Looking for and Creating Shareholder Value - Eurobank Ergasias’ Perspective

http://www.bengrahaminvesting.ca/Outreach/2015_conference/Karavias.pdf
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on April 19, 2015, 03:33:29 PM
Was anybody at this conference to hear Fokion Karavias' presentation? Curious what his thoughts on GREXIT and the current situation were.
Title: Re: EGFEY - Eurobank
Post by: muscleman on April 20, 2015, 07:32:05 AM
Recently Piraeus bank is dropping like a stone and seems to trade at a deeper discount than Eurobank. Is anyone taking a look?
The asset/liability inside/outside Greece seem to match, so if GREXIT happens, maybe it can still be fine?
Title: Re: EGFEY - Eurobank
Post by: muscleman on April 21, 2015, 08:57:46 AM
If Greek bonds default again, how will that impact the banks?
I am surprised how fast Piraeus is dropping. It is trading at a larger discount than other Greek banks. Is there any special concern about this bank?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on April 24, 2015, 02:45:46 PM
http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on April 24, 2015, 02:52:31 PM
I bought some at €0.09 myself last week. You'll have to bid higher than the current ask as the traders will want to rip you off a little. ;)
Title: Re: EGFEY - Eurobank
Post by: muscleman on April 24, 2015, 07:24:22 PM
http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

Piraeus bank seems cheaper than Eurobank, and larger.
Why buy Eurobank?
Title: Re: EGFEY - Eurobank
Post by: Txvestor on April 24, 2015, 09:58:04 PM
http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

I suspect WLRoss has also bought some more eurobank. There was a recent interview i saw with WLR, can't remember exactly where, i think it was either bloomberg, fox business or cnbc, and he was asked about his eurobank investment and the greek situation, and after some general comments he mentioned that their initial investment left them with some lock out interval etc and sounded like he wanted to add at the end of that period.
I think that before Greece leaves the Euro, at the very least there will be another election and I highly doubt the Greeks vote themselves out. Like an addict struggling to kick their habit, the Greeks just can't seem to reform their system. The irony is, I think if they pull it off, they have the chance to be a truly competitive economy built on hospitality, tourism, and can even attract manufacturing with their ports etc. Greece should not be where it is right now. They have much to offer the world once they get their act together. They do however need to pull up their socks and do the needed reforms. No age 55 retirements and shortened work weeks can be tolerated. Likewise wealthy greeks and closed professions etc need opening up. Lots of needed reforms.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on April 25, 2015, 09:37:29 AM
http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

Piraeus bank seems cheaper than Eurobank, and larger.
Why buy Eurobank?

They just made an agreement to forgive up to EUR 20,000 per borrower - I don't know all the details or how much money this entails, but that sounds like a substantial write off which could be why it's cheaper. I don't have the time to fully evaluate the value of very competitor between my main job and my side business. I trust that W.L Ross and Prem Watsa did their research and that's good enough for me to leverage their experience and expenses involved. Also, to be fair, I didn't really get interested in this until after it had declined 75% from the value they purchased at.

http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

I suspect WLRoss has also bought some more eurobank. There was a recent interview i saw with WLR, can't remember exactly where, i think it was either bloomberg, fox business or cnbc, and he was asked about his eurobank investment and the greek situation, and after some general comments he mentioned that their initial investment left them with some lock out interval etc and sounded like he wanted to add at the end of that period.
I think that before Greece leaves the Euro, at the very least there will be another election and I highly doubt the Greeks vote themselves out. Like an addict struggling to kick their habit, the Greeks just can't seem to reform their system. The irony is, I think if they pull it off, they have the chance to be a truly competitive economy built on hospitality, tourism, and can even attract manufacturing with their ports etc. Greece should not be where it is right now. They have much to offer the world once they get their act together. They do however need to pull up their socks and do the needed reforms. No age 55 retirements and shortened work weeks can be tolerated. Likewise wealthy greeks and closed professions etc need opening up. Lots of needed reforms.

I think this is a bit much. Greece has made severe reforms. So much so that they ran a structural primary surplus in 2014 on the back of severe expense cuts. The real problem is euro demands are too high. Germany is demanding they run a primary surplus of 7% for the next 10-15 years (can't remember for exactly how long). There has never been a single euro area country, not even Germany, who has been able to do this. In fact, it's my understanding that Germany's high water mark was 3% and wasn't done consistently for a decade.

I tend to side with the Greeks here. Reforms have been made. More reforms need to be made and will be made over time, but Germany's demands are absolutely ridiculous in this light. I think it's totally reasonable for the Greek politicians to demand more fair treatment and more reasonable benchmarks while they work to restructure their debt, government, and economy. They've been demonized in the euro area like Fannie/Freddie, AIG, and the Banks were here in the U.S. and it's not fair for them to bear the brunt of a crisis that everyone participated in either through direct action or complacency.
Title: Re: EGFEY - Eurobank
Post by: Txvestor on April 25, 2015, 10:12:11 AM
Thats the price one pays for bankrupting oneself. If you don't think about leverage wisely BEFORE you get into it, you pay a heavy price when you are deep in it.
I don't think anyone is advocating for more expense cuts from the Greeks, but surely they need to work on making their economy more competitive. Their preferred way in the past was currency devaluations, but since they no longer possess that lever, they are having to do the other reforms.
They need to learn the hard lesson of living within their means. This is to a varying degree an issue for many of the western liberal democracies.
Those pretending like 18T of debt is nothing for the US are again ignoring the reality. If you look at the innate discomfort long term successful investors have with debt, you would realise that it is fools gold.
If Greece defaults they should and probably in time would be kicked out. They are entirely at the mercy of their debtors, who fortunately for them don't want them to default, but they need to step up because the patience of their debtors should also not be taken for granted. The frustration of the EU finance ministers at their meeting regarding the idle talk of varoufakis was quite palpable. The Greeks need to put up or shut up. I suspect sooner or later it is going to come to that. The longer this game of charades goes on, the better prepared the counterparties would be to an eventual default, and the ECB and other EU institutions to isolating the impact of an eventual default. In my observation, a crisis seldom arrives with a long prelude for that precise reason.
Title: Re: EGFEY - Eurobank
Post by: kab60 on April 26, 2015, 09:14:12 AM
I think Greek would be better off defaulting. They are loaded with too much debt they will never be able to pay back. Tough luck for the lenders, but that is why you earn interest. My fear is that ordinary Greeks and Europeans pick up the tab while most of the banks have gotten out in time. Too big to fail - for banks and countries - creates perverse incentives.
Title: Re: EGFEY - Eurobank
Post by: Txvestor on April 26, 2015, 07:09:49 PM
I think Greek would be better off defaulting. They are loaded with too much debt they will never be able to pay back. Tough luck for the lenders, but that is why you earn interest. My fear is that ordinary Greeks and Europeans pick up the tab while most of the banks have gotten out in time. Too big to fail - for banks and countries - creates perverse incentives.

Here is the flaw with your logic. The EU is basically willing to extend and pretend. Wink wink, nod nod, you owe us x billion, but we will stretch out the maturity, and drop the interest rates to damn near zero if not zero. It is like a slow default spread out over a 40yr period so as to make it palatable for their political constituencies. And remember 0% of anything is zero. Even with its massive debt, the eurozone is not asking for large payments here. The sticking point in the discussions is the needed reforms. That is where Syriza is inappropriately dragging their feet and testing the patience of their EU partners, saying different things to different constituencies and basically BSing around. Their first effort was a pan european populist anti austerity and reform approach in the struggling southern states and when that did not get much traction/sympathy, their approach has been drag and delay, then beg and plead. They conveniently ignore the examples of the Irish and others who took their medicine and came out on the other side.
Like you said, maybe they will default, and maybe they should, but if they do, i think they will go through turmoil like they have never seen, and the Eurozone will be alright after some initial tremors is My best guess, and for the reasons I mentioned previously, the greeks have already been ringfenced. And even after that turmoil, if they do not reform their economy and make themselves more competitive, they will struggle in this globally very competitive world. I hope the greeks choose wisely, of course they should get the best deal they can from willing EU partners, but they must reform themselves too. As i said many times, I think they have much to offer the world. They can be a very prosperous country, but they must change their ways.
Title: Re: EGFEY - Eurobank
Post by: Sunrider on April 27, 2015, 02:27:31 AM
2CC

Just a quick note - this is not Germany vs. Greece (unfortunately this is the short-hand that the left-wing government has introduced in the Greek media as a convenient way to detract from their immature and irresponsible approach to negotiations).

I should disclose that I was born in Germany (don't live there anymore) and that I was at a Greek wedding with lots of Greeks from Greece just yesterday.

Sadly, once you have a government minister in Greece saying in an interview that Schaeuble (German Finance minister) wants "to make soap with our fat" you know that you're dealing with infantile, vote grubbing populists and you can understand why the entire Eurozone Group of Finance ministers isn't very willing to give much to the Greeks in these negotiations. (A very unfortunate, uncalled for ad-hominem attack harking back to the Nazi history and the persecution of Jews and minorities ... and that minister was not rebuffed or made to resign, as one would expect.)

They really did blow their chance after the elections to tone down the rhetoric and engage broadly with the Eurogroup ... there are many in Europe (and in Germany) that are of a similar opinion ... i.e. that the country needs help and that Europe should give it. In fact it is willing to do so. What is sad is that these politicians were so inept that they truly pissed off every single negotiation partner in the rest of Europe. You can't expect to be given more money after publicly proclaiming that you don't want to stick to contracts and agreements made, simply because they were made by the previous government. That simply is not a basis for intergovernmental negotiations and agreement (remember, we're talking a democratic change here, not a dictator who had sold out the country being ousted in a coup or something to that extent).

I don't think Germany has any interest in "punishing" the Greeks (for what?) or destroying the country or having it leave the Euro. In fact, its one of the Greeks' largest creditors and it's pretty obvious that this debt will, in real terms, never be repaid. So things are not as easy as saying "the Germans are too hard on them". Interestingly, there was a letter to the editor in the FT a few weeks ago from a couple from Ireland (both public servants whose wages were cut substantially after the GFC) who basically said that their country is now experiencing that the "German" approach (again, a misnomer in my view) is working as this country is recovering (despite the interest rates charged by the rest of Europe that is far in excess of what Greece pays). They, in essence, said thank you.

Many of the Greeks I spoke to yesterday feel similarly. They are disgusted by their current government and they recognise that the country got exactly what it voted for in the past ... and that they collectively f'd it up. The only thing they wish for is for a competent, not populist and honest set of politicians to finally take the country forward, through hard times that will undoubtedly come because they know that, under whatever terms (and however much eased), the country can only prosper once people acknowledge the problems and change them.


http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

Piraeus bank seems cheaper than Eurobank, and larger.
Why buy Eurobank?

They just made an agreement to forgive up to EUR 20,000 per borrower - I don't know all the details or how much money this entails, but that sounds like a substantial write off which could be why it's cheaper. I don't have the time to fully evaluate the value of very competitor between my main job and my side business. I trust that W.L Ross and Prem Watsa did their research and that's good enough for me to leverage their experience and expenses involved. Also, to be fair, I didn't really get interested in this until after it had declined 75% from the value they purchased at.

http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423 (http://www.reuters.com/article/2015/04/23/greece-fairfax-fin-eurobnk-ergasias-idUSL1N0XK3IO20150423)

Not much new here, except this:

Quote
Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

Anyone else hear about this? I would certainly be a little more comfortable if Fairfax or Ross was adding given that they have far more information than we do about the type of reserving the company is doing the current stress they're undergoing. I had limit orders in to add around 0.047 and 0.045 every time it dipped below USD 0.05. They never got filled though despite some trades registering in that area. It was unfortunate, but I wouldn't hesitate to add to my position at these prices if Watsa and/or Ross were given their level of information. I simply needed a lower price to help me accommodate for my own ignorance/uncertainty and lack of resources to determine how the current outflows are affecting operations.

I suspect WLRoss has also bought some more eurobank. There was a recent interview i saw with WLR, can't remember exactly where, i think it was either bloomberg, fox business or cnbc, and he was asked about his eurobank investment and the greek situation, and after some general comments he mentioned that their initial investment left them with some lock out interval etc and sounded like he wanted to add at the end of that period.
I think that before Greece leaves the Euro, at the very least there will be another election and I highly doubt the Greeks vote themselves out. Like an addict struggling to kick their habit, the Greeks just can't seem to reform their system. The irony is, I think if they pull it off, they have the chance to be a truly competitive economy built on hospitality, tourism, and can even attract manufacturing with their ports etc. Greece should not be where it is right now. They have much to offer the world once they get their act together. They do however need to pull up their socks and do the needed reforms. No age 55 retirements and shortened work weeks can be tolerated. Likewise wealthy greeks and closed professions etc need opening up. Lots of needed reforms.

I think this is a bit much. Greece has made severe reforms. So much so that they ran a structural primary surplus in 2014 on the back of severe expense cuts. The real problem is euro demands are too high. Germany is demanding they run a primary surplus of 7% for the next 10-15 years (can't remember for exactly how long). There has never been a single euro area country, not even Germany, who has been able to do this. In fact, it's my understanding that Germany's high water mark was 3% and wasn't done consistently for a decade.

I tend to side with the Greeks here. Reforms have been made. More reforms need to be made and will be made over time, but Germany's demands are absolutely ridiculous in this light. I think it's totally reasonable for the Greek politicians to demand more fair treatment and more reasonable benchmarks while they work to restructure their debt, government, and economy. They've been demonized in the euro area like Fannie/Freddie, AIG, and the Banks were here in the U.S. and it's not fair for them to bear the brunt of a crisis that everyone participated in either through direct action or complacency.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on May 27, 2015, 03:05:07 PM
http://greece.greekreporter.com/2015/05/26/canadian-financier-watsa-im-optimistic-about-greece/

Let's make a deal!
Title: Re: EGFEY - Eurobank
Post by: frommi on May 28, 2015, 10:40:51 AM
http://greece.greekreporter.com/2015/05/26/canadian-financier-watsa-im-optimistic-about-greece/

Let's make a deal!

Don`t count on a deal. Lagarde and Schäuble have both talked about a GR-Exit now and with the greece politicians not moving it looks like greece can be forced to exit the € any weekend now.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on May 28, 2015, 10:46:12 AM
http://greece.greekreporter.com/2015/05/26/canadian-financier-watsa-im-optimistic-about-greece/

Let's make a deal!

Don`t count on a deal. Lagarde and Schäuble have both talked about a GR-Exit now and with the greece politicians not moving it looks like greece can be forced to exit the € any weekend now.

Doubtful. I personally believe all of this is just posturing and you'll get a deal in the 11th hour when one of the two sides blinks. I could certainly be wrong here, but I don't think that the Greek citizens who voted to stay in Greece will allow their politicians to get away with a purposeful default that gets them knocked out. Also, I don't think either side has anything to win in the short/medium term from exit, so an exit should really be untenable from all perspectives and something should get done.

That being said, I haven't been buying at these levels in case I'm wrong. If it were to fall back to the $0.05 range I'd be trying to pick up more, but none of my limit orders ever filled when it was trading in that range :/
Title: Re: EGFEY - Eurobank
Post by: frommi on May 28, 2015, 11:14:41 AM
Doubtful. I personally believe all of this is just posturing and you'll get a deal in the 11th hour when one of the two sides blinks.

Thats possible, but i think that german politicians will have a very hard time arguing for a third greece rescue package to the german public and bringing it through the parlament. The question is where it ends and without reforms there will be no end to payments. They burned nearly 250 billion € in 3 years, this is just like a hole without a bottom and long term both sides will be better off with an exit. (This is now public opinion in germany according to the latest surveys and for german politicians public polls are very important.)

And for greece to move the time is running out. At the end of june they have no money anymore to pay salaries and pensions in €, so what can they do?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on May 28, 2015, 12:49:38 PM
Doubtful. I personally believe all of this is just posturing and you'll get a deal in the 11th hour when one of the two sides blinks.

Thats possible, but i think that german politicians will have a very hard time arguing for a third greece rescue package to the german public and bringing it through the parlament. The question is where it ends and without reforms there will be no end to payments. They burned nearly 250 billion € in 3 years, this is just like a hole without a bottom and long term both sides will be better off with an exit. (This is now public opinion in germany according to the latest surveys and for german politicians public polls are very important.)

And for greece to move the time is running out. At the end of june they have no money anymore to pay salaries and pensions in €, so what can they do?

Well, I certainly don't really view the bail-out money as a loan. If European countries actually thought they were going to get paid back, they must not have been thinking too hard. Consider the episode where Greece defaulted and restructured private debts to be eligible to receive more loans that made it more indebted than it was prior to the restructuring/default. If that doesn't make you scratch your head about giving "loans" and expecting to be repaid then I don't know what would. It was simply a way of forcing losses on private bondholders before publicly funded bailouts were given - not a new "loan."

They're billed as loans to pass the test of public opinions of headlines. Realistically, they're a mechanism of wealth transfer to help Greece out in an environment where fiscal unity doesn't exist while still maintaining some semblance of access to international credit markets. That's why the maturities are so extended and the rates relatively low - furthermore, I wouldn't be surprised to see some form of restructuring take effect a few years out when it's more politically palpable for all parties involved to admit what the "loans" really were.
Title: Re: EGFEY - Eurobank
Post by: influx on June 02, 2015, 01:54:31 AM
http://greece.greekreporter.com/2015/05/26/canadian-financier-watsa-im-optimistic-about-greece/

Let's make a deal!

Don`t count on a deal. Lagarde and Schäuble have both talked about a GR-Exit now and with the greece politicians not moving it looks like greece can be forced to exit the € any weekend now.

Doubtful. I personally believe all of this is just posturing and you'll get a deal in the 11th hour when one of the two sides blinks. I could certainly be wrong here, but I don't think that the Greek citizens who voted to stay in Greece will allow their politicians to get away with a purposeful default that gets them knocked out. Also, I don't think either side has anything to win in the short/medium term from exit, so an exit should really be untenable from all perspectives and something should get done.

That being said, I haven't been buying at these levels in case I'm wrong. If it were to fall back to the $0.05 range I'd be trying to pick up more, but none of my limit orders ever filled when it was trading in that range :/

I share this opinion too. I think this is a political game (theory). And someone maybe buying at these prices close to the politicians and they on purpose create a deep distressed situation when there are relatively normal ways out.
I can never know of course.
For me it is worth to risk something for a possible asymmetric gain.

Another interesting perspective:
www.project-syndicate.org/commentary/varoufakis-ecb-grexit-threat-by-hans-werner-sinn-2015-05
Title: Re: EGFEY - Eurobank
Post by: gfp on June 08, 2015, 06:42:34 AM
Wilbur Ross on CNBC -
http://www.cnbc.com/id/102740495
Title: Re: EGFEY - Eurobank
Post by: influx on June 09, 2015, 01:27:14 AM
Related to Pension system and VAT that Ross mentioned
http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-5
Title: Re: EGFEY - Eurobank
Post by: influx on June 12, 2015, 12:31:48 AM
Wilbur Ross: There’s no liquidity in the Greek economy
http://video.foxbusiness.com/v/4290924655001/wilbur-ross-theres-no-liquidity-in-the-greek-economy/
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on June 17, 2015, 07:56:02 AM
So it would appear we're the closest we've been to Grexit/default in this entire scenario, and the stock is still 44% off it's lows in USD terms. Markets are interesting that way...
Title: Re: EGFEY - Eurobank
Post by: Txvestor on June 17, 2015, 08:05:39 AM
Either that or the market is overlooking the rhetoric as gamesmanship. Syriza will not be able to survive in power if there is a Grexit and they likely know that. I think the likelihood remains an agreement at the EU leaders summit at the end of the month.
The consequences of a Grexit for Greece are worse. And that should help serve as motivation. Only radicals would bring on those consequences. I could be wrong but Tsipiras doesn't stike me as a radical. Time will tell.
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 17, 2015, 10:53:22 PM
http://www.zerohedge.com/news/2015-06-17/greek-debt-committee-just-declared-all-debt-illegal-illegitimate-and-odious

two months ago Greek Zoi Konstantopoulou, speaker of the Greek parliament and a SYRIZA member, said she had established a new "Truth Committee on Public Debt" whose purposes was to "investigate how much of the debt is “illegal” with a view to writing it off."

Moments ago, this committee released its preliminary findings, and here is the conclusion from the full report presented below:

    All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.
Title: Re: EGFEY - Eurobank
Post by: influx on June 18, 2015, 12:55:13 AM
Wilbur again: http://www.cnbc.com/id/102761862
Just to add confidence to this topic, optimism :)
Of course one may say he is biased. Bottom line it is a personal (subjective) conviction, and eventual insight into the political process
Title: Re: EGFEY - Eurobank
Post by: influx on June 18, 2015, 07:18:03 AM
Alternative scenarios..
I do think a strong/deep/fierce isolation may follow, or it is already in the process and they (greece) are being  told/threatened to "block" them thru swift or other such systems
http://brontecapital.blogspot.com/2015/02/dear-eurozone-officials-mr-putin-is.html



The FT has a remarkable story today about how Eurozone officials are worried about Greece. To quote:
" the fears of eurozone officials that the Greek government was unaware of the precariousness of its financial situation"

This is kind of amazing. There is an old adage - which is that if you owe someone $100 you have a problem. If you owe someone a $100,000,000,000 they have a problem.

Greece's debt (and hence the German/Eurozone problem) is somewhat larger than that.

Moreover Greece runs a primary budget surplus. The only reason the Greek government needs money (ever) is to roll existing debt.

If they default on existing debt that problem goes away.

Paul Krugman summarised the problem with devastating clarity.

Bluntly he points out the Troika (and the above worried Eurozone officials) can't hurt the Greek Government by denying incremental finance because the Greek Government does not need incremental finance.

--

Krugman does however point out that the Greek banks require finance. As Krugman puts it:

"the power of the creditors over Greece comes via the ability to crash the Greek banking system, which is heavily dependent on the ability to borrow at need from the ECB. Cut off that support, and Greece suffers banking collapse. So yes, the creditors have a large club they can use on a recalcitrant Greece."
But Krugman overstates that club. It is entirely within Alexis Tsipras's power to default to the ECB too. Indeed the pattern for government defaults is to simultaneously force a private sector default.

How about this for a negotiating position... we will pass a law to make it illegal for any Greek bank to repay the ECB. Period.

Then have a one week banking holiday, re-denominate all remaining Greek bank assets and liabilities in Drachma, and if a default event passes any court we will nationalise the Greek banks as-per-Washington Mutual - leaving the obligations in some stripped-down shell from which there is nothing to collect.

Finally, in this environment, depositors will receive shares in the new Greek banks in proportion to their deposits. Those shares will be worth a lot because an obscene amount of bank liabilities will be wiped out.

--

This will crash the Greek economy? You make me laugh. We are already at Great Depression levels and removing the burden of your silly debt schedules will be incredibly stimulative.

Sure we will lose access to clearing but Vladimir Putin is lending us a few billion dollars and we have a clearing arrangement in Singapore. [They will do this for anyone from Libyan dictators down...]

Moreover I was once told by Capital One - a respected US credit card company - that recently bankrupted people make the best credits.* After all their past debts have been cancelled and they are by definition solvent. It won't take two years and the financial markets will be happy to lend to us again.

--

Finally we are not a wildly interconnected economy. Its not like Finmeccanica - the Italian company which makes components for Boeing Dreamliners and thus needs the global financial and payments system to function. We do simple stuff, sell olive oil and feta cheese and lots of tourism services.

It won't take long but we expect our beaches to be overrun with fat often drunk German tourists. And we kind of like it that way. The fatter the better. At we will sell them Retsina. It will be cheap and they might learn to like it. You Germans like to drink, don't you.

--

So what do I want?

Enough money that I am allowed to run primary deficits. Fairly large ones. 1.5 percent of GDP would be nice but I will settle for 1 percent. And of course you know we are never going to repay it.

I don't care how you do this. You can do it as a direct subsidy, you can do it any way you like. But as we are not going to repay it so at some stage you are going to suck it up. For political purposes you probably want to dress it in some "equalisation scheme" so it is less obvious what you are doing. But that is your problem. You know what I want.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on June 23, 2015, 08:18:44 PM
Getting closer. Vote in Parliament this weekend?
Title: Re: EGFEY - Eurobank
Post by: influx on June 25, 2015, 03:00:13 AM
To resolution you mean?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on June 26, 2015, 08:08:26 PM
http://www.bbc.com/news/world-europe-33296839 (http://www.bbc.com/news/world-europe-33296839)
Title: Re: EGFEY - Eurobank
Post by: NormR on June 27, 2015, 04:17:18 AM
Looks bad   :(
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on June 27, 2015, 10:33:29 AM
Looks bad   :(

extension refused......

http://www.bbc.com/news/world-europe-33300543

Sleep walking to a new economic crisis? 

cheers
Zorro
Title: Re: EGFEY - Eurobank
Post by: VersaillesinNY on June 27, 2015, 10:56:16 AM
After wasting 6 months "negotiating" and destroying the Greek economy, these elected clowns' real intention is a return to the drachma.
Let's hope that the Greek people makes the right choice and kicks them back in the opposition. In the meantime, it's going to look really nasty next week.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 27, 2015, 02:54:44 PM
Jup, quite dramatic. Also another huge potential loss for Watsa & co. Betting on next worldwide crisis yet putting big bucks on Greek recovery etc. Being contrarian is one thing but being right is what counts. :x He'll have to hurry to get that 15%/year he is aiming for since 2010/2011. /endrant

Funny tweet by Barbarian Capital:
https://twitter.com/BarbarianCap/status/614605643173990400
Title: Re: EGFEY - Eurobank
Post by: karthikpm on June 27, 2015, 07:06:59 PM
How big is Watsa's exposure to EGFEY?
Title: Re: EGFEY - Eurobank
Post by: randomep on June 28, 2015, 08:50:32 AM
After wasting 6 months "negotiating" and destroying the Greek economy, these elected clowns' real intention is a return to the drachma.
Let's hope that the Greek people makes the right choice and kicks them back in the opposition. In the meantime, it's going to look really nasty next week.

While I agree with your accessment that it will get nasty next week. I don't agree with your pessimism. I am thinking hard about Templeton's advice: "buy at the point of maximum pessimism"
Title: Re: EGFEY - Eurobank
Post by: frommi on June 28, 2015, 09:26:24 AM
While I agree with your accessment that it will get nasty next week. I don't agree with your pessimism. I am thinking hard about Templeton's advice: "buy at the point of maximum pessimism"

I don`t think anyone can value a greek bank at the moment, so regardless of what you pay you can not be sure to make a profit even if greece stays in the €-zone. You can be sure that the banks need to be recapitalized after the chaos.
Title: Re: EGFEY - Eurobank
Post by: Packer16 on June 28, 2015, 09:42:06 AM
This is worse than most expected.  The Greek government is a joke with academics like the finance minister running the negotiations.  Hopefully, the Greeks will vote for the proposal (otherwise their savings will be devalued significantly) and Syriza will banished to the scrap heap of history with their like minded allies Golden Dawn.

I think banks are at ground zero and may be worth less than their current share price.  Fortunately, Intralot has removed most of its cash from Greece.  There may be some interesting bargains in the coming days.

Packer
Title: Re: EGFEY - Eurobank
Post by: NormR on June 28, 2015, 09:58:09 AM
There may be some interesting bargains in the coming days.

This.  The banks might not survive, but other businesses should be able to make it through a currency conversion. 
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 28, 2015, 10:03:08 AM
Yes, glad I sold out of eurob at a Profit. Have you looked at jumbo Packer? Not leveraged as you like them but cheap, growing and some business outside of greece already. I'll bite if it gets close to 2012 lows as it would trade at just few times earnings. What is your current thinking on opap?
Title: Re: EGFEY - Eurobank
Post by: Packer16 on June 28, 2015, 11:13:34 AM
Jumbo does look like a really nice company, a toy company/retailer with 25%+ EBITDA margins who would have thought?  It has about 80% of its business in Greece so a devaluation will hurt profitability but a nice company to watch.  I can check the Greek bond on Monday and see what the implied new currency rate would be.  Fairfax purchased Jumbo in the last swoon and sold for a nice profit in the subsequent rally.  Like Jumbo, OPAP is another interesting one to watch (Baupost owns them) however I think a devaluation could have a good sized hit to both these firms.

Packer
Title: Re: EGFEY - Eurobank
Post by: karthikpm on June 28, 2015, 11:23:00 AM
Packer,

Jumbo is on my watch list too.  What is OPAP ?
Title: Re: EGFEY - Eurobank
Post by: Cardboard on June 28, 2015, 11:47:59 AM
When a country that owes money to its eye balls tries to negotiate a retirement age of 67 starting in 2020 vs something like 2017 then they are getting what they deserve. I may have the years wrong but, I was shocked when I read over how little they were arguing.

Portugal and Ireland and to a lesser extent Spain and Italy, have taken seriously their financial troubles. On the other hand, since the Greece crisis became front page in 2011, they have done near nothing. They have taken Europe hostage with threats about leaving the Euro zone instead of implementing sound reforms. They use themselves as an example as to what could happen next to other countries in the periphery such as Italy and Spain. Unfortunately for them, we are not in 2011 and the bond market seems to understand that very well with Spanish and Italian bonds trading at very low yields.

Other than for geopolitical reasons (Russia), I think that it would be positive for Europe and the markets to let Greece go. It is always the bus that we have not seen that hits us.

Cardboard
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 28, 2015, 12:00:41 PM
Jumbo does look like a really nice company, a toy company/retailer with 25%+ EBITDA margins who would have thought?  It has about 80% of its business in Greece so a devaluation will hurt profitability but a nice company to watch.  I can check the Greek bond on Monday and see what the implied new currency rate would be.  Fairfax purchased Jumbo in the last swoon and sold for a nice profit in the subsequent rally.  Like Jumbo, OPAP is another interesting one to watch (Baupost owns them) however I think a devaluation could have a good sized hit to both these firms.

Packer

Glad to see you agree with my views on Jumbo. They also did quite well in 2014 despite poor macro conditions. Over the longer term I see them doing very well on improved macro economics. I did not know Fairfax once bought them, thanks.

While the risk of a Greek exit and return to the Drachma is more likely than ever, I still believe there is a good chance it gets averted in the end. Either the referendum gets cancelled out of fear/further negotation or the people vote 'Yes' and the eurogroup is friendly enough to keep it going a little while longer, forcing Greece to a deal in the end. I have a hard time seeing most Greeks voting 'No' and saying "F*ck it all". But history has shown that people as a group can do very irrational things so time will tell. There is also the possibility that Europe takes irreversible action before or after the referendum because they are fed up or don't see any other option at this point.

Expect future academia to talk about this Greek tragedy like they do now about the Great Depression, the 1987 crash, Dot Com bubble, subprime mortgage crisis etc. (I know I have a dog in this fight which makes me biased but) I'm surprised by the general lack of interest from this board on this subject, both on the macro level and on the individual Greek securities. Styles differ of course...

In any case it will be hard for me not to buy stocks like Jumbo should they go down 50%+ from here as long as there is a chance that Grexit doesn't happen. Needless to say Intralot would be preferred in any case. I sold some 25%+ of my position in the last few weeks as I was shocked a deal didn't happen. Greek markets closed tomorrow but hopefully they open again later this week.

Packer,

Jumbo is on my watch list too.  What is OPAP ?

http://www.opap.gr/en/web/corporate.opap.gr/144

I believe we have a thread about the company on the board, look it up. ;)
Title: Re: EGFEY - Eurobank
Post by: NormR on June 28, 2015, 12:54:03 PM
How big is Watsa's exposure to EGFEY?

About $250 million CAD as of Friday's close according to my local terminal.
Title: Re: EGFEY - Eurobank
Post by: argonaut on June 28, 2015, 01:58:02 PM
Packer,

If Autohellas gets knocked down because of this weeks tug of finance; perhaps there may be another place to enter a position even with a Greek exit?
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 28, 2015, 02:06:10 PM
How big is Watsa's exposure to EGFEY?

About $250 million CAD as of Friday's close according to my local terminal.

Believe the original cost was €400M last year.  They also hold a €200M position in Grivalia (Europroperties) and smaller stakes in Praktiker Greece and Mytilineos. I assumed the total was higher and closer to €1B. Still costly of course if things don't pan out.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 28, 2015, 02:39:12 PM
https://twitter.com/jonathanalgar/status/615261523880112129

Guess we'll just have to wait it out.
Title: Re: EGFEY - Eurobank
Post by: NormR on June 28, 2015, 02:55:49 PM
How big is Watsa's exposure to EGFEY?

About $250 million CAD as of Friday's close according to my local terminal.

Believe the original cost was €400M last year.  They also hold a €200M position in Grivalia (Europroperties) and smaller stakes in Praktiker Greece and Mytilineos. I assumed the total was higher and closer to €1B. Still costly of course if things don't pan out.

I don't think the non-banks are at much risk.  (They might do very well over the long term.)  Correct me if I'm wrong.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on June 28, 2015, 02:59:07 PM
The Greeks are actually being very, very smart here.

The IMF loans default Tuesday, but really – who gives a sh1te. The IMF could quite easily extend an extraordinary grace period to avoid default; if they choose not to – they simply reinforce the odds on a ‘No’ vote in the referendum.

If the Greeks vote ‘No’; they will have explicit sovereign authority to simply stop ALL external debt servicing and repayments, and make current payments on ONLY what THEY choose to pay. Support our banks in the next few days (ECB), and we will repay asap those whose help us, and grant favorable concessions to our friends once we’re standing again. We can, and will, do the same as the Icelanders; anytime we wish. You are welcome to sue.

Nothing says the Greeks have to convert all their euro obligations into new currency (drachma) either. If they believe there will be an immediate 50% devaluation upon conversion, they need only convert 50% of the internal euro obligations - & let the gain on the remaining 50% take them back to where there were.

If the Germans really want their money back - it’s very straight forward; simply hire a Greek work force of migrant labor, and tie some of the resultant euro-denominated remittance stream to debt defeasance. The Greeks need the work, and the Germans need the labor force; you can remain poor, or dig yourselves out – your choice.

If there is an exit, within 6-9 months there will be new heads in most of the opposing European institutions. There may be new ones on the Greek side as well. With passing time, different heads, and different dynamics – a new day becomes highly likely.

Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?

Sometimes, all you can do is pull the trigger; and take a leap of faith. Good on the Greeks for finding the courage to do so.

SD
Title: Re: EGFEY - Eurobank
Post by: JoelS on June 28, 2015, 03:46:33 PM
How does an investor gain confidence that any Greek government (Syriza or otherwise) won't give haircuts to foreigners holding greek equities?  The foreigners are the easy targets since they are not a constituency the government has to cater to.

Title: Re: EGFEY - Eurobank
Post by: saltybit on June 28, 2015, 04:31:29 PM
http://thereformedbroker.com/2015/06/28/some-stuff-you-should-know-about-greece-before-you-lose-your-s/
Title: Re: EGFEY - Eurobank
Post by: constructive on June 28, 2015, 04:43:02 PM
How does an investor gain confidence that any Greek government (Syriza or otherwise) won't give haircuts to foreigners holding greek equities?  The foreigners are the easy targets since they are not a constituency the government has to cater to.

That's illegal under international law and the consequences would be more severe than the benefits. The Greek government has plenty of other problems to deal with and is not so irrational that they will pick an additional fight for no reason.

On the other hand, nationalizations, dividend suspensions, and other capital controls are quite possible.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on June 28, 2015, 05:27:20 PM
How does an investor gain confidence that any Greek government (Syriza or otherwise) won't give haircuts to foreigners holding greek equities?  The foreigners are the easy targets since they are not a constituency the government has to cater to.

That's illegal under international law and the consequences would be more severe than the benefits. The Greek government has plenty of other problems to deal with and is not so irrational that they will pick an additional fight for no reason.

On the other hand, nationalizations, dividend suspensions, and other capital controls are quite possible.

Capital controls have been imposed. http://www.reuters.com/article/2015/06/28/us-eurozone-greece-idUSKBN0P40EO20150628 (http://www.reuters.com/article/2015/06/28/us-eurozone-greece-idUSKBN0P40EO20150628)
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 28, 2015, 07:07:29 PM
The Greeks are actually being very, very smart here.

The IMF loans default Tuesday, but really – who gives a sh1te. The IMF could quite easily extend an extraordinary grace period to avoid default; if they choose not to – they simply reinforce the odds on a ‘No’ vote in the referendum.

If the Greeks vote ‘No’; they will have explicit sovereign authority to simply stop ALL external debt servicing and repayments, and make current payments on ONLY what THEY choose to pay. Support our banks in the next few days (ECB), and we will repay asap those whose help us, and grant favorable concessions to our friends once we’re standing again. We can, and will, do the same as the Icelanders; anytime we wish. You are welcome to sue.

Nothing says the Greeks have to convert all their euro obligations into new currency (drachma) either. If they believe there will be an immediate 50% devaluation upon conversion, they need only convert 50% of the internal euro obligations - & let the gain on the remaining 50% take them back to where there were.

If the Germans really want their money back - it’s very straight forward; simply hire a Greek work force of migrant labor, and tie some of the resultant euro-denominated remittance stream to debt defeasance. The Greeks need the work, and the Germans need the labor force; you can remain poor, or dig yourselves out – your choice.

If there is an exit, within 6-9 months there will be new heads in most of the opposing European institutions. There may be new ones on the Greek side as well. With passing time, different heads, and different dynamics – a new day becomes highly likely.

Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?

Sometimes, all you can do is pull the trigger; and take a leap of faith. Good on the Greeks for finding the courage to do so.

SD

Do you still have NBG stocks? I do think a default might be beneficial to Greeks, but not sure how this will impact stocks. I've seen these banks trying to match despite with domestic debt and foreign liabilities with foreign assets. So if capital control is imposed maybe the conversion back to drachma would be fine?
Title: Re: EGFEY - Eurobank
Post by: mvalue on June 28, 2015, 07:24:46 PM
The Greeks are actually being very, very smart here.

The IMF loans default Tuesday, but really – who gives a sh1te. The IMF could quite easily extend an extraordinary grace period to avoid default; if they choose not to – they simply reinforce the odds on a ‘No’ vote in the referendum.

If the Greeks vote ‘No’; they will have explicit sovereign authority to simply stop ALL external debt servicing and repayments, and make current payments on ONLY what THEY choose to pay. Support our banks in the next few days (ECB), and we will repay asap those whose help us, and grant favorable concessions to our friends once we’re standing again. We can, and will, do the same as the Icelanders; anytime we wish. You are welcome to sue.

Nothing says the Greeks have to convert all their euro obligations into new currency (drachma) either. If they believe there will be an immediate 50% devaluation upon conversion, they need only convert 50% of the internal euro obligations - & let the gain on the remaining 50% take them back to where there were.

If the Germans really want their money back - it’s very straight forward; simply hire a Greek work force of migrant labor, and tie some of the resultant euro-denominated remittance stream to debt defeasance. The Greeks need the work, and the Germans need the labor force; you can remain poor, or dig yourselves out – your choice.

If there is an exit, within 6-9 months there will be new heads in most of the opposing European institutions. There may be new ones on the Greek side as well. With passing time, different heads, and different dynamics – a new day becomes highly likely.

Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?

Sometimes, all you can do is pull the trigger; and take a leap of faith. Good on the Greeks for finding the courage to do so.

SD

This is way over my head, I can't follow how any of these cause and effect sequences are obvious. Will be interesting to watch and learn.
Title: Re: EGFEY - Eurobank
Post by: Cardboard on June 28, 2015, 09:13:02 PM
"Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?"

Because Germany was the most advanced nation on Earth pre-WWII and a top 3 GDP worldwide.

There was a video published a while back by someone on this board on Varoufakis "the professor" highlighting some conspiracy theory by the U.S. that they had created two industrial zones around Japan and Germany post WWII... Anyway forgot the rest of it because it was such BS since Germany and Japan were already industrial powers before WWII and simply regained their footing once they forgot fighting.

Varoufakis should not be admired. Just another Lenine wannabe.

Cardboard
Title: Re: EGFEY - Eurobank
Post by: persistentone on June 28, 2015, 10:52:17 PM
I don't think the non-banks are at much risk.  (They might do very well over the long term.)  Correct me if I'm wrong.

If Greek companies selling to a domestic Greek audience get paid going forward in Drachmas, and Drachmas devalue 90% against the Euro, the earnings streams of those Greek companies will certainly be less valuable.
Title: Re: EGFEY - Eurobank
Post by: influx on June 29, 2015, 02:16:57 AM
There was a video published a while back by someone on this board on Varoufakis "the professor" highlighting some conspiracy theory by the U.S. that they had created two industrial zones around Japan and Germany post WWII... Anyway forgot the rest of it because it was such BS since Germany and Japan were already industrial powers before WWII and simply regained their footing once they forgot fighting.

This is in his book also explained.
The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy (Economic Controversies) Paperback – October 11, 2011

I read it. But if you read some of his other stuff, is that he and his colleagues do have sensible proposals.
For example he authored this with Galbraith
https://varoufakis.files.wordpress.com/2013/07/a-modest-proposal-for-resolving-the-eurozone-crisis-version-4-0-final1.pdf
Simple and beautiful is Policy 2. Nothing new or spectacular.
It just shows that he really wants solving things. That is what I believe.
But that is another topic.

This is for EGFEY.

The bottom line in this is: The fault is with us investors when we invest, specially in these where macro and political actions may impact the investment

Good read is this and in reality Greece is un-investable
http://www.salientpartners.com/epsilontheory/post/2015/06/22/inherent-vice


I’m often asked what I think the outcome of the negotiations between Greece and the Troika will turn out to be. Will Greece leave the Euro and default on its debt? Will Germany blink? And when I answer the question by saying that I don’t know, I can feel the disappointment. Don’t you even have an opinion, Ben? You seem to know a lot of the facts here, or at least you talk a good game about domestic Greek politics and multi-level game-playing. What good is game theory and all your knowledge if you can’t even handicap the odds of a Greek default?

Game theory is useful precisely because it tells me that there is no fundamentals-based or structural methodology to handicap the odds of a Greek default! Sometimes the answer to a mathematical question is the same as the answer to a prayer or the answer to a Magic 8 Ball: NO. There is no greater understanding possible here through the use of science and mathematics. To paraphrase Von Neumann again, get used to it.

In my stump speech about investing in the Golden Age of the Central Banker, I always start by making the distinction between decisions under risk and decisions under uncertainty. In a decision under risk, you know the possible outcomes of a decision and you have a rough sense of the probabilities to associate with those outcomes. In a decision under uncertainty, you either don’t know the possible outcomes or it’s impossible to assign meaningful probability distributions to those outcomes. What’s at stake in the distinction between the two? All of modern portfolio theory and all of mainstream macroeconomic theory and all of econometric modeling – ALL of it – is based on the assumption that everyone in the world is making decisions under risk. Violate that assumption – an assumption that is as deeply buried and indecipherably written within the edifice of academic economics today as the assumption that “a nationwide decline in home prices is impossible” was deeply buried and indecipherably written within the edifice of $10 trillion worth of residential mortgage-backed securities in 2008 – and your portfolio risk analysis suddenly has a hole big enough to drive a truck through. Game theory provides a perspective and a toolkit to distinguish between decisions under risk and decisions under uncertainty. It can’t work miracles by predicting the outcome of something that’s inherently unpredictable, but it can identify the situations that are unpredictable and suggest coping mechanisms for dealing with them. And that’s a lot. It can also highlight the situations where you have made a category error, where you have a misplaced confidence in your existing risk management toolkit or perspective. And that’s a lot, too.   
...
...
Title: Re: EGFEY - Eurobank
Post by: wknecht on June 29, 2015, 04:19:12 AM
The Greeks are actually being very, very smart here.

The IMF loans default Tuesday, but really – who gives a sh1te. The IMF could quite easily extend an extraordinary grace period to avoid default; if they choose not to – they simply reinforce the odds on a ‘No’ vote in the referendum.

If the Greeks vote ‘No’; they will have explicit sovereign authority to simply stop ALL external debt servicing and repayments, and make current payments on ONLY what THEY choose to pay. Support our banks in the next few days (ECB), and we will repay asap those whose help us, and grant favorable concessions to our friends once we’re standing again. We can, and will, do the same as the Icelanders; anytime we wish. You are welcome to sue.

Nothing says the Greeks have to convert all their euro obligations into new currency (drachma) either. If they believe there will be an immediate 50% devaluation upon conversion, they need only convert 50% of the internal euro obligations - & let the gain on the remaining 50% take them back to where there were.

If the Germans really want their money back - it’s very straight forward; simply hire a Greek work force of migrant labor, and tie some of the resultant euro-denominated remittance stream to debt defeasance. The Greeks need the work, and the Germans need the labor force; you can remain poor, or dig yourselves out – your choice.

If there is an exit, within 6-9 months there will be new heads in most of the opposing European institutions. There may be new ones on the Greek side as well. With passing time, different heads, and different dynamics – a new day becomes highly likely.

Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?

Sometimes, all you can do is pull the trigger; and take a leap of faith. Good on the Greeks for finding the courage to do so.

SD
Who cares? How about people with principles.
Title: Re: EGFEY - Eurobank
Post by: Sportgamma on June 29, 2015, 04:40:41 AM
When a country that owes money to its eye balls tries to negotiate a retirement age of 67 starting in 2020 vs something like 2017 then they are getting what they deserve. I may have the years wrong but, I was shocked when I read over how little they were arguing.

Portugal and Ireland and to a lesser extent Spain and Italy, have taken seriously their financial troubles. On the other hand, since the Greece crisis became front page in 2011, they have done near nothing. They have taken Europe hostage with threats about leaving the Euro zone instead of implementing sound reforms. They use themselves as an example as to what could happen next to other countries in the periphery such as Italy and Spain. Unfortunately for them, we are not in 2011 and the bond market seems to understand that very well with Spanish and Italian bonds trading at very low yields.

Other than for geopolitical reasons (Russia), I think that it would be positive for Europe and the markets to let Greece go. It is always the bus that we have not seen that hits us.

Cardboard

A Greek exit is absolutely necessary and no amount of reform is going to change that fact. Prices and costs are too high under the Euro to make them competitive. 25% of the workforce is unemployed, for crying out loud. How is reforming retirement age going to have any effect in that situation?

That Greece is holding Europe hostage is an interesting statement…

The Euro is systemicly flawed. That has been pointed out by economists since the beginning. Putting the blame on Greek "values" is not going to change that fact. 
Title: Re: EGFEY - Eurobank
Post by: Sunrider on June 29, 2015, 05:25:54 AM
+1

SD - easy for you to opine from Canada. This referendum has little to do with courage and all to do with political grandstanding/manoeuvring.

For your information - the Greek people are asked for a plebiscite that their constitution actually disallows (on fiscal matters) on a proposal that is no longer on the table, for a programme that will have expired by the time the vote is held. Go figure.

Hence my +1 - people with principles (on both sides), but also people with brains and some emotional intelligence (of which the Greek negotiating team showed preciously little ... instead it was all about dignity and democratic mandate --- forget about the commitments and contracts signed by our predecessors: "Just give us the money and leave us to carry on as before!"


Cheers!

The Greeks are actually being very, very smart here.

The IMF loans default Tuesday, but really – who gives a sh1te. The IMF could quite easily extend an extraordinary grace period to avoid default; if they choose not to – they simply reinforce the odds on a ‘No’ vote in the referendum.

If the Greeks vote ‘No’; they will have explicit sovereign authority to simply stop ALL external debt servicing and repayments, and make current payments on ONLY what THEY choose to pay. Support our banks in the next few days (ECB), and we will repay asap those whose help us, and grant favorable concessions to our friends once we’re standing again. We can, and will, do the same as the Icelanders; anytime we wish. You are welcome to sue.

Nothing says the Greeks have to convert all their euro obligations into new currency (drachma) either. If they believe there will be an immediate 50% devaluation upon conversion, they need only convert 50% of the internal euro obligations - & let the gain on the remaining 50% take them back to where there were.

If the Germans really want their money back - it’s very straight forward; simply hire a Greek work force of migrant labor, and tie some of the resultant euro-denominated remittance stream to debt defeasance. The Greeks need the work, and the Germans need the labor force; you can remain poor, or dig yourselves out – your choice.

If there is an exit, within 6-9 months there will be new heads in most of the opposing European institutions. There may be new ones on the Greek side as well. With passing time, different heads, and different dynamics – a new day becomes highly likely.

Excessive WWI reparations imposed on Germany, went a long way to supporting the rise of Hitler and the Nazis of WWII. The Germans are a proud people, but so are the Greeks; if you take the same approach … why would you expect a different result?

Sometimes, all you can do is pull the trigger; and take a leap of faith. Good on the Greeks for finding the courage to do so.

SD
Who cares? How about people with principles.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on June 29, 2015, 07:27:01 AM
We’ve had the Zimbabwe experience - so this is nothing new.

Nobody enjoys being made to look stupid, and the higher the pedestal the less tolerance. Every currency in the world (even the Drachma) has the sovereigns’ central bank standing behind it in the event of a bank run – except the Euro. We’re special!

The biggest Greek export is tourism and people, and they will both get a massive boost on exit. The best & brightest simply get on a plane & leave; the unemployment rate declines, and their repatriated foreign savings buy them a domestic tourist hotel in a few years. Those others who can, relocate as temporary migrant labour and repatriate part of their earnings back home, lowering unemployment. The rest of the world simply flocks to Greece over the next few years for cheaper holidays, creating thousands of new jobs for youth in the process; and lower unemployment.

Yes, foreign bankers get screwed; so what. They are not innocent bystanders, and were fully aware of the risks they were taking. They simply bet and lost; get over the whining, suck it up, and move on. 2-3 years out these bankers will be gone, new ones will have taken their place, and we’ll all be frenemies again. The way of the world.

We got rid of our NBG a long time ago. In most of these cases, the DSIB banks get temporarily nationalized, and then recapitalized with a healthy foreign investment slug once the crises has passed. Inbound equity capital is subject to an extended lock-up period, with dividends being permitted repatriation. Recover your investment via the dividend flow, then sell the underlying investment when capital controls are eventually lifted. Time honored, and nothing particularly magical.

SD
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 29, 2015, 08:51:47 AM
http://video.cnbc.com/gallery/?video=3000392441

I think there are some interesting points here:
1. Greece is having a primary budget deficit right now, so even if they stop paying all debt interest, they will still not be able to fund their pension and other things, and no one wants to lend to them for the next few years. What can they do about it? They still have to reform with pension cuts etc., no?
2. A grexit would create massive social unrest. No tourists would want to go there for a while. That will dramatically hurt the tourism business.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on June 29, 2015, 11:42:28 AM
http://video.cnbc.com/gallery/?video=3000392441

I think there are some interesting points here:
1. Greece is having a primary budget deficit right now, so even if they stop paying all debt interest, they will still not be able to fund their pension and other things, and no one wants to lend to them for the next few years. What can they do about it? They still have to reform with pension cuts etc., no?
2. A grexit would create massive social unrest. No tourists would want to go there for a while. That will dramatically hurt the tourism business.

I believe they were running a primary surplus prior to the Syriza party getting elected - all that would have to change for that to occur again is to get rid of all of the uncertainty surrounding the country.
Title: Re: EGFEY - Eurobank
Post by: Sunrider on June 29, 2015, 12:47:52 PM
Whilst much of what you say about how the world works is true, I think you're a bit too positive on Zim - as far as I can tell, what you posit for Greece did not and is not happening there ... certainly not the most attractive tourist location on my list (as a fact and because I wouldn't want to support Robert & his cronies) ... what's there to see? If I want safari I can get it better elsewhere in Africa. Vic Falls? Zambian side is just fine ...

So I don't think it's quite so easy as saying a few foreign bankers will get stiffed ... the adjustments for the Greek economy and people will be massive. Also, don't forget, this proud people has been at each other's throat as recently as ... what? The 70s I think.



We’ve had the Zimbabwe experience - so this is nothing new.

Nobody enjoys being made to look stupid, and the higher the pedestal the less tolerance. Every currency in the world (even the Drachma) has the sovereigns’ central bank standing behind it in the event of a bank run – except the Euro. We’re special!

The biggest Greek export is tourism and people, and they will both get a massive boost on exit. The best & brightest simply get on a plane & leave; the unemployment rate declines, and their repatriated foreign savings buy them a domestic tourist hotel in a few years. Those others who can, relocate as temporary migrant labour and repatriate part of their earnings back home, lowering unemployment. The rest of the world simply flocks to Greece over the next few years for cheaper holidays, creating thousands of new jobs for youth in the process; and lower unemployment.

Yes, foreign bankers get screwed; so what. They are not innocent bystanders, and were fully aware of the risks they were taking. They simply bet and lost; get over the whining, suck it up, and move on. 2-3 years out these bankers will be gone, new ones will have taken their place, and we’ll all be frenemies again. The way of the world.

We got rid of our NBG a long time ago. In most of these cases, the DSIB banks get temporarily nationalized, and then recapitalized with a healthy foreign investment slug once the crises has passed. Inbound equity capital is subject to an extended lock-up period, with dividends being permitted repatriation. Recover your investment via the dividend flow, then sell the underlying investment when capital controls are eventually lifted. Time honored, and nothing particularly magical.

SD
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on June 29, 2015, 02:54:07 PM
Fully agree that it will be gut wrenching for the population. Zimbabwe had a full blown financial collapse and inflation beyond even what the Germans experienced, the Greeks have a bank collapse; neither is something that anyone should have to experience, and it will be hardest on the old and the weak. The good news is that Greece IS at least a place that many might like to visit - Zimbabwe, not so much.

European internal animosities are also the norm, and NOT the exception. 2WW's in the last 100 years, and more recently the Balkans, didn't just happen to occur in Europe for no reason. Agreed its safer for everyone if the disputes can be managed, but no one can hold back change. Should the Greeks decide that joining the EU was a mistake, we have to respect that majority decision - their population will be fully aware that they are going to pay the cost. If they collectively see no difference between that, and the misery of the last five years, that's their choice.

They are tired of getting beaten up, and are done playing the game. In the US, the Roosevelt era "New Deal" went a very long way to fundamentally changing the economic landscape for hundreds of thousands of Americans. Lets allow the Greeks the same opportunity.

SD
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 29, 2015, 05:49:40 PM
http://uk.advfn.com/news/DJN/2015/article/67509306

Greece's government, led by the left-wing Syriza party of Prime Minister Alexis Tsipras, is trying to assure voters that a "no" to the austerity demands of European authorities and the International Monetary Fund would bring them a better bailout deal, including debt relief. Greek officials argue that the referendum is just the latest stage in Greece's negotiation process with its creditors--the strongest indication so far of Syriza's willingness to use high-stakes brinkmanship in its challenge to Europe's economic orthodoxy.

Seriously? Is this the card he is going to play? What a joker......
I would think if his intention is to get a GREXIT, he should just hold a referendum for whether Greeks want to stay in the euro zone or not, instead of whether Greeks want this bailout deal or not.

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?
Title: Re: EGFEY - Eurobank
Post by: Mephistopheles on June 29, 2015, 05:52:34 PM

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?

Because supposedly European leaders would be too afraid of contagion, so they give him better terms.
Title: Re: EGFEY - Eurobank
Post by: muscleman on June 29, 2015, 06:29:20 PM

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?

Because supposedly European leaders would be too afraid of contagion, so they give him better terms.

But since he is already representing the whole Greek people in the negotiation, what's the difference between he saying no and the referendum saying no? He already kept saying no for the past 6 months during negotiation but he is not getting a better deal.

I think the fact that he wants the referendum to say no merely to get a better deal implies that he is also afraid of Grexit and could not afford to leave EU. Therefore the EU leaders will not give him a better deal. With the whole nation in chaos right now, pressure is mounting fast. He may have to resign soon.

Note that before the syria selection, Greece was in primary budget surplus. Now with all these crap it is in deficit again. The party should resign.
Title: Re: EGFEY - Eurobank
Post by: Mephistopheles on June 29, 2015, 06:41:20 PM

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?

Because supposedly European leaders would be too afraid of contagion, so they give him better terms.

But since he is already representing the whole Greek people in the negotiation, what's the difference between he saying no and the referendum saying no? He already kept saying no for the past 6 months during negotiation but he is not getting a better deal.

I think the fact that he wants the referendum to say no merely to get a better deal implies that he is also afraid of Grexit and could not afford to leave EU. Therefore the EU leaders will not give him a better deal. With the whole nation in chaos right now, pressure is mounting fast. He may have to resign soon.

Note that before the syria selection, Greece was in primary budget surplus. Now with all these crap it is in deficit again. The party should resign.

Maybe he thinks the referendum holds more leverage. I'm not sure, as he's a clown.

I think the best thing to do is allow the Grexit. Giving them more money will kick the can down the road, especially with the steep terms. The Greeks are notorious for defaulting, so they're better off with their own currency, as is the rest of the world. Short term pain for long term gain.
Title: Re: EGFEY - Eurobank
Post by: Packer16 on June 29, 2015, 08:53:37 PM
The one fact I did not know but may be relevant is Greece has only defaulted once in the 20th/21st century in 1932.  They defaulted 4 other times since 1800 but that was in in 19th century.  This would imply a different situation than moat other 20th/21st century defaulters.  I think the question Greeks need to ask is do they want to part of Europe or the Balkans. 

Packer
Title: Re: EGFEY - Eurobank
Post by: Schwab711 on June 29, 2015, 09:41:51 PM
The one fact I did not know but may be relevant is Greece has only defaulted once in the 20th/21st century in 1932.  They defaulted 4 other times since 1800 but that was in in 19th century.  This would imply a different situation than moat other 20th/21st century defaulters.  I think the question Greeks need to ask is do they want to part of Europe or the Balkans. 

Packer

Why do you think their default history is relevant? Do you think they'll receive better terms than Argentina, for example, because they haven't defaulted recently? I've been assuming their markets will react similarly to Argentina's in 2001 or 02. Do you think it will go better or worse? I've been dead-wrong so far by waiting for the default (and US market correction) that hasn't come.

Another interesting fact, almost every sovereign default in modern history is due to high leverage ratios combined with a fixed currency (beware, China!). These countries struggle because they need to grow faster than the cost of debt AND relative to the nation they are pegged to.
Title: Re: EGFEY - Eurobank
Post by: Sunrider on June 29, 2015, 11:21:16 PM
That is true and quite likely features in the thinking of the "northern" creditors as well. In fairness, Germany and other countries also benefited from debt relief in their history, which many Germans like to forget (of course, it doesn't help the other side's argument pointing to this after a history of fiscal irresponsibility, political brinkmanship and pure populism that, in substance, is no different from that of the politicians that people elected in the last 30 years that got Greece into this mess).

What I wonder - after you negotiate with that Tsirper and he sits across the table from you and, presumably, tells you that his sincere, discusses solutions, etc. and then repeatedly flies back home to call you names (blackmail, wanting to stifle the will of the Greek people, etc. etc.), how do you sit down again with someone like this for the next round? I guess Kudos to the personalities in the room that still try to reach an outcome with someone who's repeatedly spat in their face!

Ευχαριστώ!

The one fact I did not know but may be relevant is Greece has only defaulted once in the 20th/21st century in 1932.  They defaulted 4 other times since 1800 but that was in in 19th century.  This would imply a different situation than moat other 20th/21st century defaulters.  I think the question Greeks need to ask is do they want to part of Europe or the Balkans. 

Packer
Title: Re: EGFEY - Eurobank
Post by: tombgrt on June 30, 2015, 01:49:30 AM

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?

Because supposedly European leaders would be too afraid of contagion, so they give him better terms.

Giving even better terms would do the opposite and cause contagion. You are after all giving in to their demands (or currently: the demands of a minority!) based on an unlawful referendum held last minute when shit is hitting the fan. By standing their ground, European leaders are drawing a line on the ground. Cross it by voting 'No' and it's effectively over. No better deal possible because they don't want to deal with increased critism and demands from Spain, Italy, Portugal, ... The whole project would have failed if contagion kicks in. Contagion would be a lot less worse if they let Greece go and make an example out of them. "Take our deals and accept your fate or this is what will happen."

Btw, I'm confident the majority will vote 'Yes' out of fear. Common sense should prevail for once. Tsipras should resign after that and the circus can start again. Although the pressure for a deal should be so high at that point it's likely a sudden make or break. But who really knows, I'm just guessing like anyone else.
Title: Re: EGFEY - Eurobank
Post by: Hielko on June 30, 2015, 03:38:24 AM

He thinks if Greeks all say no to this bailout deal, he will have a stronger negotiation position? Why? What's the negotiation leverage?

Because supposedly European leaders would be too afraid of contagion, so they give him better terms.
Perhaps they did indeed think that the fear of contagion would give them a strong negotiation position, but they failed to realize that 2015 is not 2011. The subdued market reaction of yesterday only made it clear that this is just an empty threat. In addition to that it appears that they don't understand that giving in to blackmail would be a way worse result for the EU than the possible exit of a country with a GDP that barely registers. For a finance minister that is supposedly an expert in game theory he seems to have failed to understand the rules of the game... The current Greek government seems to be a bunch of amateuristic clowns, unfortunately the greek people have to suffer for that. But I can't feel too sorry about that since they did choose for Syriza.
Title: Re: EGFEY - Eurobank
Post by: Charlie on June 30, 2015, 04:33:11 AM
"The one fact I did not know but may be relevant is Greece has only defaulted once in the 20th/21st century in 1932.  They defaulted 4 other times since 1800 but that was in in 19th century.  This would imply a different situation than moat other 20th/21st century defaulters.  I think the question Greeks need to ask is do they want to part of Europe or the Balkans. 

Packer"

I read and heard other stories about Greece default, that they were default half of their whole history:

"Many European countries are culturally attuned to bankruptcy. Indeed, Greece has spent approximately half of the 182 years since it achieved independence from the Ottoman Empire in a state of default and therefore denied access to international capital markets – a position it is likely to resume in the very near future."

http://blogs.telegraph.co.uk/news/peteroborne/100081316/some-european-countries-are-in-the-habit-of-going-bankrupt/
Title: Re: EGFEY - Eurobank
Post by: Packer16 on June 30, 2015, 04:52:44 AM
The half of history since independence in which they were in default was the 19th century.  Portugal, Spain and Austria Hungary were in the same boat but I do not hear any talk of them being serial defaulters.  Germany defaulted twice in the 20th century.

I think the default history is really relevant especially when you have one default in the 20th century versus 5 for Argentina.  In Greece'e case this is more of an exception since 1900 (a number of creditworthy countries defaulted in the Depression) but for Argentina it is the rule.  In my mind, the  serial defaulters have default in their culture while the no default countries do not.

Packer   
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on June 30, 2015, 05:33:48 AM
The Greek population elected their government, and they can change it any time as well. They haven’t changed it, because it IS doing what it was elected to do – change things for the better.

Negotiators don’t have to see eye to eye; there are no ‘rules’. Your banker, extending you a mortgage, expects you to be humble and grateful for his/her doing you a favour. It’s a very short conversation, when you remind him/her that he/she is just a SALESPERSON in a better cut suit, and just one of many, offering the commodity product of money. F’ing ingrats! ….

The very smooth powerful and the prestigious lead privileged lives, and get what they want by undermining their opposition through the opportune leak, poisoned whisper, etc. The rough and ready get in your face, and piss all over your rug; what is missed is that they are both extremely good at what they do. If there was no drama – the Greeks wouldn’t be very Greek …. and the world would be a far poorer place for it.

The creators of the Eurozone are getting their noses rubbed in its structural unsoundness, and the Greeks are just calling the bluff. If there really is the Eurozone as claimed, the ECB will backstop the run on the Greek banking system and the IMF loan will be extended. If the ECB does not step up …. it’s just a rich man’s club – with different rules for the rich and the poor.

If you’re one of the poor men in this, and getting beaten up daily.. why would you not just step away, take your currency and fiscal policy back, and start doing things for yourself again. Exactly as you used to do before the Eurozone existed.


SD
Title: Re: EGFEY - Eurobank
Post by: influx on June 30, 2015, 06:04:44 AM
Negotiators don’t have to see eye to eye; there are no ‘rules’. Your banker, extending you a mortgage, expects you to be humble and grateful for his/her doing you a favour. It’s a very short conversation, when you remind him/her that he/she is just a SALESPERSON in a better cut suit, and just one of many, offering the commodity product of money. F’ing ingrats! ….

The creators of the Eurozone are getting their noses rubbed in its structural unsoundness, and the Greeks are just calling the bluff. If there really is the Eurozone as claimed, the ECB will backstop the run on the Greek banking system and the IMF loan will be extended. If the ECB does not step up …. it’s just a rich man’s club – with different rules for the rich and the poor.

If you’re one of the poor men in this, and getting beaten up daily.. why would you not just step away, take your currency and fiscal policy back, and start doing things for yourself again. Exactly as you used to do before the Eurozone existed.


SD

Well said. Iceland did it. They defaulted on (some) of their obligations.
USA did 1971 with their gold obligations

So it is, one wants them to stay in EUR so that one picks up equity gains as one of the motives.

One thing I fail to understand is why the greeks are not reducing their salaries in EUR, and would very likely have to reduce (devalue) their salaries if they go back to drachmas (or whatever the currency)
Title: Re: EGFEY - Eurobank
Post by: S2S on June 30, 2015, 07:43:37 AM
You're making it sound like "poor man" Greece did everyone a huge favor by joining the EU.

In reality, it is more the Greeks' obfuscating and contorting their own financials (read: they lied) until their government could enjoy the same 5% interest rate awarded to the Germans.

Michael Lewis's 2010 piece, "Beware of of Greeks Bearing Bonds", is a good refresher on the topic: http://t.co/UilFyeMDWv

The Greek population elected their government, and they can change it any time as well. They haven’t changed it, because it IS doing what it was elected to do – change things for the better.

Negotiators don’t have to see eye to eye; there are no ‘rules’. Your banker, extending you a mortgage, expects you to be humble and grateful for his/her doing you a favour. It’s a very short conversation, when you remind him/her that he/she is just a SALESPERSON in a better cut suit, and just one of many, offering the commodity product of money. F’ing ingrats! ….

The very smooth powerful and the prestigious lead privileged lives, and get what they want by undermining their opposition through the opportune leak, poisoned whisper, etc. The rough and ready get in your face, and piss all over your rug; what is missed is that they are both extremely good at what they do. If there was no drama – the Greeks wouldn’t be very Greek …. and the world would be a far poorer place for it.

The creators of the Eurozone are getting their noses rubbed in its structural unsoundness, and the Greeks are just calling the bluff. If there really is the Eurozone as claimed, the ECB will backstop the run on the Greek banking system and the IMF loan will be extended. If the ECB does not step up …. it’s just a rich man’s club – with different rules for the rich and the poor.

If you’re one of the poor men in this, and getting beaten up daily.. why would you not just step away, take your currency and fiscal policy back, and start doing things for yourself again. Exactly as you used to do before the Eurozone existed.


SD
Title: Re: EGFEY - Eurobank
Post by: Pelagic on June 30, 2015, 08:58:30 PM
Maybe Watsa and Wilbur Ross can pitch in a few bucks to Greece's crowdfunded bailout. I think their funds target might be a few euros short though.

https://www.indiegogo.com/projects/greek-bailout-fund#/story
Title: Re: EGFEY - Eurobank
Post by: influx on July 01, 2015, 01:00:33 AM
Michael Lewis's 2010 piece, "Beware of of Greeks Bearing Bonds", is a good refresher on the topic: http://t.co/UilFyeMDWv

http://www.bloombergview.com/articles/2015-05-07/greece-saunters-across-the-autobahn
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 01, 2015, 06:20:51 AM
Maybe Watsa and Wilbur Ross can pitch in a few bucks to Greece's crowdfunded bailout. I think their funds target might be a few euros short though.

https://www.indiegogo.com/projects/greek-bailout-fund#/story

The funny thing about this is that the EUR 1.6B is only a drop in the bucket compared to the total debt of 200+B. A massive restructuring/default is likely needed in the mid-term if Greece is to ever keep it's head above water. I'm sure that the EU knows this and that the politicians were just calling the bailout money "loans" to appease the populace. The math just doesn't really work out without the most generous growth assumptions - which in a world devoid of real growth is definitely setting an impossibly high bar.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 03, 2015, 08:09:05 AM
IMF Report: http://www.telegraph.co.uk/finance/economics/11713944/Greece-needs-another-50bn-to-prevent-bankruptcy-and-will-not-survive-without-massive-debt-relief-admits-IMF.html

- Greece needs at least another €50bn to keep it afloat for the next three years and a substantial alleviation of its debt burden. Of the €50bn the country needs to avoid going bankrupt, €36bn would have to come from European creditors "on highly concessional terms" said the IMF. The analysis also assumes Greece has access to nearly €20bn of rescue funds which have since expired after its current rescue ended on June 30.
- Government arrears have reached €7bn so far this year, adding another €5bn to Greece's financing needs over the next three years.  In agreeing to lower its primary budget surplus targets, creditors will have to stump up another €13bn of financing for Greece
- It recommended that the beleaguered debtor be given a 20-year grace period before making any further repayments to its European creditors.
- Without sustainable debt dynamics, the Fund is ready to pull the plug on Greece after its bail-out program ends in March 2016. But any move to extend the profile on Greece’s debts – which already stretch out to 2057 – have been fiercely resisted by eurozone member states. Such a concession would mean Europe's leaders would have to admit to their taxpayers they would not be paid back in full.


 …. So win or lose the vote on Sunday, the Eurozone has to come up with 50B+. An immediate 50B+ eurozone write-off, and at least 13B+ in new cash to get over this year’s primary surplus. And …. a 20yr+ grace period on all interest payments, starting immediately.

…. This is the opening position, before the IMF loan default and the referendum; even if the Greeks lose on Sunday, the final numbers will probably be materially higher. If the Greeks win, and are enticed to stay in the Eurozone; the final numbers will be higher still. The IMF gets their eurozone supported loan repaid in full, or they are out March 2016. One has to think the rest of the euro-zone will also be under similar terms.

… Seems to us that the only adults in the room are the Greeks and the IMF. Stay in the circus tent, or step back to your own currency. Safer for everyone if they stay in the Eurozone, but this extend and pretend shite is over.

Good on the Greeks, and the IMF, to have the courage to call the game.
Play time is over.

SD


Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 03, 2015, 08:38:43 AM
You're making it sound like "poor man" Greece did everyone a huge favor by joining the EU.

In reality, it is more the Greeks' obfuscating and contorting their own financials (read: they lied) until their government could enjoy the same 5% interest rate awarded to the Germans.

Michael Lewis's 2010 piece, "Beware of of Greeks Bearing Bonds", is a good refresher on the topic: http://t.co/UilFyeMDWv

The Greek population elected their government, and they can change it any time as well. They haven’t changed it, because it IS doing what it was elected to do – change things for the better.

Negotiators don’t have to see eye to eye; there are no ‘rules’. Your banker, extending you a mortgage, expects you to be humble and grateful for his/her doing you a favour. It’s a very short conversation, when you remind him/her that he/she is just a SALESPERSON in a better cut suit, and just one of many, offering the commodity product of money. F’ing ingrats! ….

The very smooth powerful and the prestigious lead privileged lives, and get what they want by undermining their opposition through the opportune leak, poisoned whisper, etc. The rough and ready get in your face, and piss all over your rug; what is missed is that they are both extremely good at what they do. If there was no drama – the Greeks wouldn’t be very Greek …. and the world would be a far poorer place for it.

The creators of the Eurozone are getting their noses rubbed in its structural unsoundness, and the Greeks are just calling the bluff. If there really is the Eurozone as claimed, the ECB will backstop the run on the Greek banking system and the IMF loan will be extended. If the ECB does not step up …. it’s just a rich man’s club – with different rules for the rich and the poor.

If you’re one of the poor men in this, and getting beaten up daily.. why would you not just step away, take your currency and fiscal policy back, and start doing things for yourself again. Exactly as you used to do before the Eurozone existed.


SD

Are the Greeks blameless? God no, but on the other hand neither are the Germans and the rest of the EU....time for everyone to realize the past is the past and deal with the problem at hand. Finger pointing will resolve nothing.......

cheers
Zorro
Title: Re: EGFEY - Eurobank
Post by: frommi on July 03, 2015, 08:49:23 AM
Are the Greeks blameless? God no, but on the other hand neither are the Germans and the rest of the EU....time for everyone to realize the past is the past and deal with the problem at hand. Finger pointing will resolve nothing.......

cheers
Zorro

Of course, but the greek problems can not be solved with money. That has not worked in the last 5 years and will not work in the next, and i seriously doubt that germany will again waste 50 billion or more in this hole, regardless of the outcome of the vote on sunday. They need a debt relief and a new start outside of the €-zone.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 03, 2015, 10:31:18 AM
I looked at Eurobank and the other 3 really hard since Pram Wasta made the bet but didn't invest. I care more about the contagion risk rather than what's going to happen in Greece. Does anyone know if this is going to affect other southern EU countries like Cyprus?
Cyprus 2015 Q1 GDP has a strong growth while Greece was in trouble, so maybe not much contagion risk?
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 03, 2015, 12:00:06 PM
Are the Greeks blameless? God no, but on the other hand neither are the Germans and the rest of the EU....time for everyone to realize the past is the past and deal with the problem at hand. Finger pointing will resolve nothing.......

cheers
Zorro

Of course, but the greek problems can not be solved with money. That has not worked in the last 5 years and will not work in the next, and i seriously doubt that germany will again waste 50 billion or more in this hole, regardless of the outcome of the vote on sunday. They need a debt relief and a new start outside of the €-zone.

Debt relief and reform....but does this process turn into a black swan type event?    Poll results are too close to call.....
Title: Re: EGFEY - Eurobank
Post by: frommi on July 04, 2015, 04:28:01 AM
Debt relief and reform....but does this process turn into a black swan type event?    Poll results are too close to call.....

Why should it? This is business as usual around the world in the last 100 years. In the short term the greek population will suffer, but only to gain in the long run.
May be the referendum is a catalyst for a market correction, but who wouldn`t welcome that?

Sorry for derailing this thread, but it looks like the equity of Eurobank is toast regardless of what happens on sunday.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 04, 2015, 05:58:48 AM
The reality is that Europe really needs a Marshall Plan, and they have to do it themselves. Write off all euro nations’ debt to around the 70% of GNP level, dissolve the existing euro structure, and replace it with a much more robust version (& more exclusive membership) that actually works.  https://en.wikipedia.org/wiki/Marshall_Plan

SD
Title: Re: EGFEY - Eurobank
Post by: frommi on July 04, 2015, 06:56:19 AM
The reality is that Europe really needs a Marshall Plan, and they have to do themselves. Write off all euro nations’ debt to around the 70% of GNP level, dissolve the existing euro structure, and replace it with a much more robust version (& more exclusive membership) that actually works.  https://en.wikipedia.org/wiki/Marshall_Plan

SD

You can`t write off the debt in all european nations, that means taking money/life-savings from the people. Do you think the government that wants to do that gets votes?
For a marshall plan to work, you have to have something to invest in. In germany there may be some infrastructure projects that can be financed, but in other nations like spain or greece there was a big infrastructure/building boom from 2002->2007. I would go so far and say this has partially created the problems, because it was financed with cheap €-debt and it was more than was needed.
They should have introduced €-bonds from the start, but there is no political will to create a true fiscal union in europe (and the population is against it in most nations, too).

I can`t really see how the whole €-project can realistically get to a happy ending, from my point of view the currency will be gone twenty years from now.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 04, 2015, 09:41:10 AM
The practical approach would be to simply extend an interest and principal payment moratorium over all the excess debt for 99+ years. All living generations benefit from the current debt relief, and the future unborn generation (net of 99+ years) of inflation takes on a liability worth almost nothing. No actual write-off, but most of the benefits of one.

The total ‘extend and pretend’ write-off could quite easily top 3-4 trillion, and run to the equivalent of 2-3 simultaneous marshal plans (net of inflation growth since the 1940’s).  Remove the debt service on this amount of money, and you free up huge amounts of already existing sovereign cash flow – annually. The funds for re-investment.

Individual and corporate savings are untouched, but would benefit from the increased economic activity. The nations themselves would simply invest in wherever they saw the most bang for the buck; it could be MUSH (municipality, university, social, hospital) spend and not just infrastructure . If a nation chose to leave the Eurozone it would see even more benefit - as it would be able to set fiscal and monetary policies appropriate to its specific needs. If you are a Portugal, Italy, Ireland, Greece, or Spain – this has to be high on the list. Same thing if you are a Germany or France.

The €-project resembles software in many ways– ie: version 1.0, 2.0, 3.0 etc. It would seem pretty clear that version 1.0 is close to done; if the €-project really is as beneficial as claimed, there will be a version 2.0.

SD
Title: Re: EGFEY - Eurobank
Post by: Txvestor on July 04, 2015, 09:42:12 AM
The reality is that Europe really needs a Marshall Plan, and they have to do themselves. Write off all euro nations’ debt to around the 70% of GNP level, dissolve the existing euro structure, and replace it with a much more robust version (& more exclusive membership) that actually works.  https://en.wikipedia.org/wiki/Marshall_Plan

SD

You are demanding this of a country(s) that apparently do not necessarily feel a sense of kinship with their southern neighbors, as for instance west germany felt for the east. What's worse the cultural/political/ideological differences are so vast that it would be nigh impossible to bridge the divide, and without bridging that divide the current impasse even if corrected with a huge debt write-down as you suggest is certain to happen again in due course. There quite simply are structural differences which without correcting doom the euro project as currently designed.
In a sense i think a better design for the euro might have been one which envisaged a strong core with other nations entering and leaving as per pre set criteria. That would have made for a more responsible periphery and a more orderly entry and exit process.
It seems to me that Northern europe is aware of this and making their choices accordingly.
I am in complete agreement with you that Greece should get a debt writedown, but I am also of the opinion that it should NOT HAPPEN without implementation of the needed reforms, and it really should not matter what the publics view on it is, if they demand to stay in the euro club. Their collective democratic choice should only be to leave if they wish. Despite the left wing rhetoric coming from Tsipras and Varoufakis et al.(latest being an accusation of terrorism by the finance minister lol). They have already demonstrated themselves incapable of running their ship by steering themselves into a debt hole out of which they acknowledge that they can't climb out. How can anyone do that without a consequence and expect the status quo to prevail. It is delusional to say the least.
In a sense I suppose that is the choice in front of them tomorrow.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 04, 2015, 09:54:36 AM
Neither side is blameless.

Comes Monday there will be new terms on the table. Comes mid to late week there may well be the appearance of Drachma. Comes the end of summer there is a very good chance they will be haggling over a divorce settlement - while their economy runs on Drachma. They don't have to reform, they could simply step away with a big settlement.

Interesting few weeks coming up

SD

Title: Re: EGFEY - Eurobank
Post by: Txvestor on July 04, 2015, 09:58:43 AM
Neither side is blameless.

Comes Monday there will be new terms on the table. Comes mid to late week there may well be the appearance of Drachma. Comes the end of summer there is a very good chance they will haggling over the divorce settlement - while their economy runs on Drachma. They don't have to reform, they could simply step away with a big settlement.

Interesting few weeks coming up

SD

I agree, if Greeks vote NO, then i think you would be right. That is the direction they voted earlier this year by putting Syriza in power, and they are effectively being asked a second time, are you sure?
I do not believe their future under a Syriza regime would look good. Certainly most free capital will think twice as hard before entering, especially given the experience of the most recent investors, and I don't see them with significant natural resources with which to build a welfare economy.
A no vote will likely require a de facto nationalization of the banking sector, and EGFEY would be worthless.
Title: Re: EGFEY - Eurobank
Post by: frommi on July 04, 2015, 10:15:47 AM
The practical approach would be to simply extend an interest and principal payment moratorium over all the excess debt for 99+ years. All living generations benefit from the current debt relief, and the future unborn generation (net of 99+ years) of inflation takes on a liability worth almost nothing. No actual write-off, but most of the benefits of one.

You can be sure that the bond market will mark the bonds down in case this happens and the bond will be worth less than before. How is that not taking money away from the holders of the bonds?

A no vote will likely require a de facto nationalization of the banking sector, and EGFEY would be worthless.

Even with a yes vote the banks need money, so there will be either heavy dilution or nationalization.
Title: Re: EGFEY - Eurobank
Post by: Txvestor on July 04, 2015, 11:20:37 AM
I'm not as pessimistic in a yes vote scenario. A yes vote would be a direct repudiation of Syriza negotiation tactics and administrative policies over the last 5mths. Tsipras would be under severe pressure to resign though i am not convinced he will. But he will be forced to accept the deal.
In a scenario where the deal on offer last week goes through and a change of gov't looks likely, I think the bonds might actually recover and ECB could eventually reopen the lending window to them.
Remember the greek economy was growing(sustainably or not is another argument) by the time Syriza took over and created all the uncertainty.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 04, 2015, 01:59:37 PM
Here is my prediction:
52% YES
48% NO

Greeks' finance minister resigns right away. Tsipras refuses to resign. Fights and chaos drags on.
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 04, 2015, 02:19:43 PM
Here is my prediction:
52% YES
48% NO

Greeks' finance minister resigns right away. Tsipras refuses to resign. Fights and chaos drags on.

hows this for close....

http://www.bloomberg.com/news/articles/2015-07-03/greeks-split-down-middle-before-bailout-referendum-poll-shows
Title: Re: EGFEY - Eurobank
Post by: Libs on July 04, 2015, 04:38:28 PM
I would bet a lot of money on 'Yes' at 1/1.

When things are falling apart at the seams, people will grab onto a lifeline, even if it repulses them. Fear is a powerful motivator.
Title: Re: EGFEY - Eurobank
Post by: Hielko on July 05, 2015, 03:34:50 AM
I would bet a lot of money on 'Yes' at 1/1.

When things are falling apart at the seams, people will grab onto a lifeline, even if it repulses them. Fear is a powerful motivator.
But it seems to me that most Greeks don't understand what they are voting for and what the possible consequences are. And I guess that's even understandable given that it's a vote on a complicated proposal that doesn't even exist anymore instead of a straightforward high-level question. Add Tsipras telling the Greek people to vote no to improve Greece's negotiations position and end austerity, and it's understandable that the majority of the population doesn't really understand what's going on. To me, it just looks like a major clusterfuck created by Syriza.
Title: Re: EGFEY - Eurobank
Post by: augustabound on July 05, 2015, 04:58:51 AM
But it seems to me that most Greeks don't understand what they are voting for and what the possible consequences are.

I read an article that mentioned that. If they haven't followed the issue closely then the wording of the 2 questions on the ballot are extremely confusing for them.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 05, 2015, 09:23:23 AM
I would bet a lot of money on 'Yes' at 1/1.

When things are falling apart at the seams, people will grab onto a lifeline, even if it repulses them. Fear is a powerful motivator.
But it seems to me that most Greeks don't understand what they are voting for and what the possible consequences are. And I guess that's even understandable given that it's a vote on a complicated proposal that doesn't even exist anymore instead of a straightforward high-level question. Add Tsipras telling the Greek people to vote no to improve Greece's negotiations position and end austerity, and it's understandable that the majority of the population doesn't really understand what's going on. To me, it just looks like a major clusterfuck created by Syriza.

Is it possible that Tsipras intentionally designed the vote like this to induce people to vote no so he can leave the EU zone? If he directly asks people to vote whether they should stay in the EU zone or not, he will almost definitely fail to get enough people to vote for leaving the EU zone.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 05, 2015, 09:26:32 AM
Here is my prediction:
52% YES
48% NO

Greeks' finance minister resigns right away. Tsipras refuses to resign. Fights and chaos drags on.

Just saw this on WSJ: "A ‘yes’ outcome could make it hard for Mr. Tsipras to survive in office, although he has signaled in recent days that he would seek to remain prime minister whatever Sunday’s result."

This clown is going to refuse to resign. If a yes outcome happens and he continues the negotiation, I don't know what will happen next. Greeks are running out of cash and daily life supplies quickly in the next week or so, and EU leaders will not trust this guy at all to implement the reforms in the deal.
Title: Re: EGFEY - Eurobank
Post by: frommi on July 05, 2015, 09:30:49 AM
The bookies have now a probability of 80% for a "no" vote.
Title: Re: EGFEY - Eurobank
Post by: Txvestor on July 05, 2015, 09:47:09 AM
Looking increasingly like it will be a No vote. Most exit polls are that way by around a 3 point margin.
I am starting to beleive that Tsipras is a closet communist whose real goal is to get Greece out of the EU and to over time bulk up relationships with Putin's Russia. All the negotiations and attempts at compromise etc are stagecraft for this, so it can be accomplished blamelessly.
Markets will likely take a beating tomorrow.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 05, 2015, 10:22:18 AM
Looking increasingly like it will be a No vote. Most exit polls are that way by around a 3 point margin.
I am starting to beleive that Tsipras is a closet communist whose real goal is to get Greece out of the EU and to over time bulk up relationships with Putin's Russia. All the negotiations and attempts at compromise etc are stagecraft for this, so it can be accomplished blamelessly.
Markets will likely take a beating tomorrow.

Agreed. I am glad that I looked hard at Eurobank and didn't invest in it.
I just hope the rest of EU would be ring fenced.
Title: Re: EGFEY - Eurobank
Post by: longinvestor on July 05, 2015, 10:27:46 AM
Looking increasingly like it will be a No vote. Most exit polls are that way by around a 3 point margin.
I am starting to beleive that Tsipras is a closet communist whose real goal is to get Greece out of the EU and to over time bulk up relationships with Putin's Russia. All the negotiations and attempts at compromise etc are stagecraft for this, so it can be accomplished blamelessly.
Markets will likely take a beating tomorrow.

Agree, this is Tsipras's goal of pulling out of EU.

On "this week-ABC", Krugman suggested this is bigger than Grexit and really the start of the unraveling of the EU at the fringes (read: South & East). I believe he is correct. EU's opportunistic southeastern expansion over the past 15 years was always untenable and was perhaps just a transitory state out of the political weakness these fringe countries found themselves in, at the time of joining the EU. The richer EU had everything to gain, preying on the southeastern weakness. So much for pretending to be a big brother. You have to be one or not.  Greece and other nations are trying to find their place in the post-modern world and it may or may not be with Central Europe.

I've been remembering a line from one of my favorite movies, "My Big Fat Greek Wedding",

Gus Portakalos "When my people were writing philosophy your people were swinging from the trees."

Wonder how much of this sort of thinking went into the vote today.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 05, 2015, 11:21:48 AM
http://www.wsj.com/articles/polls-close-in-greek-referendum-1436113280
Title: Re: EGFEY - Eurobank
Post by: randomep on July 05, 2015, 01:51:01 PM

Anyone hear of when the stockmarket and banks will open now? With the referendum done?

I checked out www.helex.gr, absolutely no mention of the crisis or shutting down last week. What a disorganized country!

Title: Re: EGFEY - Eurobank
Post by: tombgrt on July 05, 2015, 01:54:47 PM
Banks opening? I doubt it.  :D

Title: Re: EGFEY - Eurobank
Post by: stevevri on July 05, 2015, 02:44:26 PM
Not that this is a surprise at this point.

http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"One official say that Eurobank was "flat out of money" late on Sunday, even though Greek depositors have been limited to €60 a day since capital controls were imposed a week ago."

Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 05, 2015, 04:35:34 PM
Good on the Greek people.

We would suggest that the banks will re-open on Tuesday morning, with NO limit on what people can withdraw. There will be pictures of flats of money in the lobbies of the major banks, surrounded by security, with staff taking notes from it to pay out the withdrawal requests as they come in. It will be turned into a media game to see if you can break the bank – amid shouts of joy, every time an empty flat is replaced with another full one. The banks need to show they can survive the run, and the population needs to release the tension of the last few weeks.

The ECB, as central banker to the Euro, will either supply all those flats of money as euros, or the banks will pay out Drachma – their choice. Fail to make Euro available, and the ECB demonstrates to everyone else in the Eurozone that they will not stand behind you. End of Eurozone.

Starting Monday, the Greeks will not just be negotiating for themselves, but for the other PIIGS as well. The demands will be aggressive, they will include material write-offs, and they will include extended term deferment. It is highly likely that it will end up being akin to a modern day Marshall Plan, and along the lines of the Icelandic model. And most of the world will support it, as it will finally move ALL of us forward.

Most would expect a new German finance minister by the end of the month, and perhaps some other departures as well. It is highly likely that there will also be a time limit on the negotiation, and another referendum on whatever the final terms are.

If the currency is Drachma, the Greeks could instantly restore most of their cuts over the last 5 years; and suddenly flow cash back to the populace again. Given the number of families relying on those pensions - the impact would be incredibly powerful.

If your portfolio manager allowed a 2% weighting to blow up your portfolio, you would instantly fire him/her; and try to rescue what you could. Exactly what we are seeing here.

SD
Title: Re: EGFEY - Eurobank
Post by: constructive on July 05, 2015, 06:07:32 PM
We would suggest that the banks will re-open on Tuesday morning, with NO limit on what people can withdraw.

Sharper, care to put your money where your mouth is? I would be happy to bet $10k against this assertion.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 05, 2015, 08:14:02 PM
We would suggest that the ECB hands are tied while there is an IMF loan in default - so they will haggle tonight and tomorrow to agree a deal. The banks need currency to distribute, and distribute now, as people have to eat. It is urgent, and it would take some hours to airlift the Euro bills - so Tuesday is the first real opportunity to open.

Talk to any banker who has survived a run, and they will all tell you there is no rule book. To win the confidence game you have to go bold, in your face, be the carne barker - and survive. Invite depositors to withdraw their funds, and they will redeposit them with you in a few days - once you prove you survive. The central banks job is to be the banking systems liquidity backstop, and they are not answerable to the politicians.

The politicians are hurt, in shock, and drawing in the wagons. But until they reach a decision, the Euro is likely to drop like a brick in anticipation of a break-up. If its liquidity is flowing again Greece can afford to wait a few months, but the clock is ticking.

We have markets for bets. If you think Greek banks are not going to reopen soon, you can quite easily invest accordingly.

SD
Title: Re: EGFEY - Eurobank
Post by: Spekulatius on July 05, 2015, 08:24:00 PM
We would suggest that the banks will re-open on Tuesday morning, with NO limit on what people can withdraw.

Sharper, care to put your money where your mouth is? I would be happy to bet $10k against this assertion.

I agree. I think Sharper has a strange way to look at the issue. The Greeks are broke and their banks run out of money, but that is their problem, the rest of the Euro zone is pretty much ring fenced at this point. I guess the question is if the ECB will keep Greece afloat until they finally exit or not. If not, Greece needs to switch to the Drachme within days, not weeks. Then they can print as much money as they want to pay there bills, it's just a matter of how much you can buy with this stuff...
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 05, 2015, 09:07:28 PM
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)
Title: Re: EGFEY - Eurobank
Post by: meiroy on July 05, 2015, 10:01:58 PM
We would suggest that the banks will re-open on Tuesday morning, with NO limit on what people can withdraw.

Sharper, care to put your money where your mouth is? I would be happy to bet $10k against this assertion.

I agree. I think Sharper has a strange way to look at the issue. The Greeks are broke and their banks run out of money, but that is their problem, the rest of the Euro zone is pretty much ring fenced at this point. I guess the question is if the ECB will keep Greece afloat until they finally exit or not. If not, Greece needs to switch to the Drachme within days, not weeks. Then they can print as much money as they want to pay there bills, it's just a matter of how much you can buy with this stuff...

Germany is going to have to adjust following its economic gains all these past years due to local regulation that pushed for higher local savings and higher consumption and debt at other European countries (and the US, everyone living off the US now... if EU breaks, how long till the US refuses to continue as a reserve currency?  Wars follow? The EU cannot break, not like this anyhow.)

After Greece it will be Spain and pals.

So, the only question is if Germany is going to pay a lot or a hella-lot. No other option.  German politicians have not been willing to take it up with the German population so someone else is doing their job.

This is definitely not a local Greece issue.


Title: Re: EGFEY - Eurobank
Post by: randomep on July 05, 2015, 11:22:38 PM
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)

I don't see it that way. The more I hear Varoufakis and Tsapris talk the more I realize they don't have a plan. This is a train wreck 6months in the making. In all that time, they never planned contingencies like IOUs or replacing Euros with Drachmas.  Even this referendum seems to be dreamt up only 2weeks ago. I really don't think anyone in the Greek government really knows where this is all heading.....


Title: Re: EGFEY - Eurobank
Post by: randomep on July 05, 2015, 11:30:46 PM

Varoufakis resigns. This is a good sign that the Greek government may change its combative way of negotiating.

Title: Re: EGFEY - Eurobank
Post by: constructive on July 07, 2015, 07:35:06 AM
We have markets for bets. If you think Greek banks are not going to reopen soon, you can quite easily invest accordingly.

Individual commenters are often much more irrational than the public markets are. I was hoping to take advantage of that.

Greek banks expected to stay closed until July 20: http://www.cnbc.com/id/102807140
Rumors of a 30% haircut on deposits: http://www.ft.com/intl/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 07, 2015, 08:44:44 AM
We have markets for bets. If you think Greek banks are not going to reopen soon, you can quite easily invest accordingly.

Individual commenters are often much more irrational than the public markets are. I was hoping to take advantage of that.

Greek banks expected to stay closed until July 20: http://www.cnbc.com/id/102807140
Rumors of a 30% haircut on deposits: http://www.ft.com/intl/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html

These two articles happened a few days before the July 5th referendum. Come on, please bring some latest news.  :)
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 07, 2015, 08:46:18 AM
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)

I don't see it that way. The more I hear Varoufakis and Tsapris talk the more I realize they don't have a plan. This is a train wreck 6months in the making. In all that time, they never planned contingencies like IOUs or replacing Euros with Drachmas.  Even this referendum seems to be dreamt up only 2weeks ago. I really don't think anyone in the Greek government really knows where this is all heading.....

Seems true. I am surprised that Tsprias is unable to submit a new proposal to creditors over 24 hours after the referendum. He seems to be an idiot.
Title: Re: EGFEY - Eurobank
Post by: tombgrt on July 07, 2015, 08:50:00 AM
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)

I don't see it that way. The more I hear Varoufakis and Tsapris talk the more I realize they don't have a plan. This is a train wreck 6months in the making. In all that time, they never planned contingencies like IOUs or replacing Euros with Drachmas.  Even this referendum seems to be dreamt up only 2weeks ago. I really don't think anyone in the Greek government really knows where this is all heading.....

Seems true. I am surprised that Tsprias is unable to submit a new proposal to creditors over 24 hours after the referendum. He seems to be an idiot.

Unlikely. He's either playing a prolonged game of chicken or wants a Grexit that he can blame on the referendum and "EU partners unwilling to make a deal".
Title: Re: EGFEY - Eurobank
Post by: constructive on July 07, 2015, 09:26:35 AM
We have markets for bets. If you think Greek banks are not going to reopen soon, you can quite easily invest accordingly.

Individual commenters are often much more irrational than the public markets are. I was hoping to take advantage of that.

Greek banks expected to stay closed until July 20: http://www.cnbc.com/id/102807140
Rumors of a 30% haircut on deposits: http://www.ft.com/intl/cms/s/0/9963b74c-219c-11e5-aa5a-398b2169cf79.html

These two articles happened a few days before the July 5th referendum. Come on, please bring some latest news.  :)

The no vote only reinforced the likelihood of negative predictions for the Greek banking system.

Yes was a vote for change and no was a vote for the status quo: no compromise with IMF and Eurozone creditors and no more ECB funding for Greek banks. Thus, no chance of banks reopening until they get more ECB funding or self-fund with drachmas/IOUs/capital raises/other emergency measures.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 07, 2015, 09:49:26 AM
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)

I don't see it that way. The more I hear Varoufakis and Tsapris talk the more I realize they don't have a plan. This is a train wreck 6months in the making. In all that time, they never planned contingencies like IOUs or replacing Euros with Drachmas.  Even this referendum seems to be dreamt up only 2weeks ago. I really don't think anyone in the Greek government really knows where this is all heading.....

Seems true. I am surprised that Tsprias is unable to submit a new proposal to creditors over 24 hours after the referendum. He seems to be an idiot.

Unlikely. He's either playing a prolonged game of chicken or wants a Grexit that he can blame on the referendum and "EU partners unwilling to make a deal".

But he promised that if he gets the NO vote, he will get a better deal with EU within 48 hours, guaranteed.
Are you saying that his game plan relies heavily on lying to move forward to Grexit?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 07, 2015, 10:53:20 AM
But he promised that if he gets the NO vote, he will get a better deal with EU within 48 hours, guaranteed.
Are you saying that his game plan relies heavily on lying to move forward to Grexit?

Do you know a politician who hasn't relied on lying?
Title: Re: EGFEY - Eurobank
Post by: Pelagic on July 07, 2015, 11:42:15 AM
Wilbur Ross still seems pretty confident the Greeks will stay in the EU.

http://www.cnbc.com/id/102813043

Speaking on his Eurobank investment -

Quote
"The last quote on Eurobank stock was a tiny fraction of its book value just before they announced the moratorium and the suspension of trading. So certainly at any kind of price like that, one would be more sensible probably to be a buyer than to be a seller," he said.

Title: Re: EGFEY - Eurobank
Post by: tombgrt on July 07, 2015, 12:22:58 PM
Wilbur Ross still seems pretty confident the Greeks will stay in the EU.

http://www.cnbc.com/id/102813043

Speaking on his Eurobank investment -

Quote
"The last quote on Eurobank stock was a tiny fraction of its book value just before they announced the moratorium and the suspension of trading. So certainly at any kind of price like that, one would be more sensible probably to be a buyer than to be a seller," he said.



Do you think he could just go ahead and say something like "Well obviously EUROB is likely toast at this point. I can't sell my holdings because no one will take it at any decent price given the size and oh, the market is closed anyway.".

That's just the position he is in. And even if he is 100% honest on his thoughts, he's still biased. I too believe there is a chance Grexit doesn't happen but I don't have to bullshit about how EUROB is possibly a steal now, that is very unlikely. I don't believe he has the luxury to be completely honest.

http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

This sounds like the beginning of Drachma.  :)

I don't see it that way. The more I hear Varoufakis and Tsapris talk the more I realize they don't have a plan. This is a train wreck 6months in the making. In all that time, they never planned contingencies like IOUs or replacing Euros with Drachmas.  Even this referendum seems to be dreamt up only 2weeks ago. I really don't think anyone in the Greek government really knows where this is all heading.....

Seems true. I am surprised that Tsprias is unable to submit a new proposal to creditors over 24 hours after the referendum. He seems to be an idiot.

Unlikely. He's either playing a prolonged game of chicken or wants a Grexit that he can blame on the referendum and "EU partners unwilling to make a deal".

But he promised that if he gets the NO vote, he will get a better deal with EU within 48 hours, guaranteed.
Are you saying that his game plan relies heavily on lying to move forward to Grexit?


Oh he promised, my mistake. :D

No seriously, he can also experience plenty of resistance from his party. In any case, betting that he is stupid would make you the patsy...
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 07, 2015, 02:35:20 PM
So the dumb and dumber show continues.  http://www.bbc.com/news/world-europe-33426328
Except that this time even the US is calling them idiots http://www.usatoday.com/story/news/world/2015/07/07/obama-greece-debt-crisis-alexis-tsipras/29816133/

It is now day 2 since the Greek banks were supposed to be out of euros; yet they have still been able to distribute 60 euro a pop at the ATM. Either the ECB euros held at the Bank of Greece have been quietly released, or they have found another source.

Those Greek banks are going to open again, in days not months, and they are going to run. It is very straight forward to temporarily nationalize, open them, and pass out either Drachma or Euros - not IOUs. The decision will be made in Greece, and each of those Greek bankers will be extremely thankful for not having to take the responsibility. Dumb and dumber just don’t get this.

The Greek demands have not changed, and there are no penalties for leaving – dumb and dumber were too incompetent to put them in. If the ECB does not put a realistic proposal forward soon, the next step will be the Greeks giving the ECB the terms (Icelandic style), and doing another referendum.

When your banker keeps screaming at you how dire your situation is, does everything in their power to topple you – and STILL fails; he is really trying to miss direct attention away from how weak he really is. If Greece exits - dumb and dumber are not going to survive telling the German people that we just lost your money; and there will be a new ruling party in Germany.

Real leaders step up to the plate when the sh1t hits the fan; even the Greeks. The wannabees just freeze, like deer in the headllight.

SD
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 07, 2015, 03:15:26 PM
And the answer to where those extra Euros are coming from ....  http://www.theglobeandmail.com/report-on-business/international-business/european-business/greece-faces-last-chance-to-stay-in-euro-as-cash-runs-low/article25334699/

However, euro zone sources in Brussels said ECB President Mario Draghi had assured finance ministers that the central bank would keep Greek lenders afloat this week as long as negotiations were under way.

.. it is nice to see some adults in the room.

SD
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 09, 2015, 09:38:21 AM
http://www.wsj.com/articles/for-some-in-syriza-a-greek-euro-exit-is-goal-1436388761
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 10, 2015, 08:10:13 AM
http://www.naftemporiki.gr/finance/story/976680/the-greek-reform-proposals

Looks like SD's prediction isn't right so far. Tsipras is not smart. Hold a referendum and get the country to vote No, and immediately submit a proposal that his people just voted NO? Only a clown can do this.  :D
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 10, 2015, 08:18:07 AM
http://www.naftemporiki.gr/finance/story/976680/the-greek-reform-proposals

Looks like SD's prediction isn't right so far. Tsipras is not smart. Hold a referendum and get the country to vote No, and immediately submit a proposal that his people just voted NO? Only a clown can do this.  :D

or the actions of someone who is desperate? Okay, he is not brilliant but he is in a difficult position. Greece desperately needs to reform but at the same time the economy has contracted 25% and the people are suffering.  If the economy contracted 25% here in the US and China, as one of our biggest creditors, demanded massive cuts to social security and medicare what do you think the public's reaction would be?

cheers
Zorro
Title: Re: EGFEY - Eurobank
Post by: frommi on July 10, 2015, 08:25:26 AM
If the economy contracted 25% here in the US and China, as one of our biggest creditors, demanded massive cuts to social security and medicare what do you think the public's reaction would be?

That just shows how stupid the construction of the € is, the US would show China the middlefinger while printing the necessary money.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 10, 2015, 08:28:01 AM
I am actually surprised by his about-face. Greece held all of the cards - when you owe someone hundreds of billions, it's their problem and not yours. I don't understand why he caved so quickly after the referendum.

Surely it doesn't take a rocket scientist to see that if you could print your own money, the currency devaluation would help Greece tremendously. So you wave that in front of the Euro-group leaders and threaten that your success will bring Spain and Italy with you and you demand haircuts on your debt to make it reasonably serviceable and for reasonable fiscal targets and boom...solved.

Instead, he folds....
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 10, 2015, 08:32:03 AM
I am actually surprised by his about-face. Greece held all of the cards - when you owe someone hundreds of billions, it's their problem and not yours. I don't understand why he caved so quickly after the referendum.

Surely it doesn't take a rocket scientist to see that if you could print your own money, the currency devaluation would help Greece tremendously. So you wave that in front of the Euro-group leaders and threaten that your success will bring Spain and Italy with you and you demand haircuts on your debt to make it reasonably serviceable and for reasonable fiscal targets and boom...solved.

Instead, he folds....

I also thought the fear of Grexit would help drive a much stronger deal for Greece. The turmoil in the EU would be huge.....but here is an interesting commentary on his actions

http://www.bloombergview.com/articles/2015-07-10/el-erian-is-greece-s-tsipras-a-political-genius-or-lucky-

cheers
Zorro
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 10, 2015, 09:35:55 AM
http://www.naftemporiki.gr/finance/story/976680/the-greek-reform-proposals

Looks like SD's prediction isn't right so far. Tsipras is not smart. Hold a referendum and get the country to vote No, and immediately submit a proposal that his people just voted NO? Only a clown can do this.  :D

or the actions of someone who is desperate? Okay, he is not brilliant but he is in a difficult position. Greece desperately needs to reform but at the same time the economy has contracted 25% and the people are suffering.  If the economy contracted 25% here in the US and China, as one of our biggest creditors, demanded massive cuts to social security and medicare what do you think the public's reaction would be?

cheers
Zorro

Greece economy was growing the 2nd fastest right before Tsipras came into power. And he interrupted that growth and throw the country into recession again.
EU's austerity measures worked in Ireland and Cyprus, and it seems working right before Tsipras came. Who should be blamed?
Title: Re: EGFEY - Eurobank
Post by: Sportgamma on July 10, 2015, 10:41:10 AM

Greece economy was growing the 2nd fastest right before Tsipras came into power. And he interrupted that growth and throw the country into recession again.
EU's austerity measures worked in Ireland and Cyprus, and it seems working right before Tsipras came. Who should be blamed?

Riiiiiiiiiiiiiight.....

http://www.tradingeconomics.com/greece/gdp
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 10, 2015, 12:32:19 PM

Greece economy was growing the 2nd fastest right before Tsipras came into power. And he interrupted that growth and throw the country into recession again.
EU's austerity measures worked in Ireland and Cyprus, and it seems working right before Tsipras came. Who should be blamed?

Riiiiiiiiiiiiiight.....

http://www.tradingeconomics.com/greece/gdp

Quarterly trends shows a different story.
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 10, 2015, 12:41:02 PM

http://www.bloombergview.com/articles/2015-07-10/el-erian-is-greece-s-tsipras-a-political-genius-or-lucky-

OK, SharperDingaan is El Erian.

Now we know.  8)
Title: Re: EGFEY - Eurobank
Post by: Sportgamma on July 10, 2015, 02:12:23 PM

Greece economy was growing the 2nd fastest right before Tsipras came into power. And he interrupted that growth and throw the country into recession again.
EU's austerity measures worked in Ireland and Cyprus, and it seems working right before Tsipras came. Who should be blamed?

Riiiiiiiiiiiiiight.....

http://www.tradingeconomics.com/greece/gdp

Quarterly trends shows a different story.

(http://i1161.photobucket.com/albums/q514/Hysmofyteligok/Giggles%20quotes%20and%20other%20stuff/internet-memes-joseph-ducreux-pics.jpg)
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 10, 2015, 03:14:37 PM
We do not have the full story yet. It would seem that they are going to be extending upwards of 45% (145bn) of the debt for 40 yrs+, and reducing the coupon rate. Quite some prize, and well worth the strong hand he is giving up. And everybody is going to vote for this .. because it is going to set the precedent that allows them to do the same thing.

Sadly that advisory slot was already taken  :)

SD


http://www.telegraph.co.uk/finance/economics/11732926/Crippled-Greece-yields-to-overwhelming-power-as-deal-looms.html

Mr Tsakalotos told the Greek parliament that Syriza aims to secure a swap of $27bn of Greek bonds held by the European Central Bank for longer-dated bonds at lower interest rates. "Many of Greece's debt demands are going to be accepted," he said.

The government is also pushing for an extension of maturities on €145bn of bail-out loans (EFSF) deep into the middle of the century to avoid a fresh crisis when they come due as a clump in the early 2020s.
Title: Re: EGFEY - Eurobank
Post by: randomep on July 10, 2015, 04:47:38 PM
so this is what happened:
Title: Re: EGFEY - Eurobank
Post by: VersaillesinNY on July 10, 2015, 07:36:02 PM
Let's get serious.
Title: Re: EGFEY - Eurobank
Post by: Dazel on July 10, 2015, 08:42:19 PM


ahhh SD my old friend....have been watching you all closely.

skipped the greek banks and went to the financier-Fairfax and loaded up on them during their pull back...they will likely double down on the turn...and make out very very well extremely pleased to have a big position in Fairfax...love the team there...i expect a Markel type evaluation when this blows over.

to be honest it is tails they win and heads they win as well...the deflation hedges (both US and Europe) would have taken off without a deal as we have seen China start to implode as well...

We all know Germany wants and needs a deal there is no way that Merkel is eating that much debt...so it is likely already written up...governments down the road will deal with it.

good theatre.

Dazel
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 11, 2015, 07:28:20 AM
We went to PWT, and got a little unexpected help from China.
End of the month PWT reports Q2 earnings, & we already know what the average oil price has been over the entire quarter.

SD
Title: Re: EGFEY - Eurobank
Post by: VersaillesinNY on July 11, 2015, 08:05:28 PM
These Siriza clowns want to leave the Euro currency and the Eurogroup doesn't trust their ability to implement reforms. Greek banks mergers & recapitalization are on the negotiation table. The Greek tragedy continues.

"Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available."

Varoufakis' op-ed: http://www.theguardian.com/commentisfree/2015/jul/10/germany-greek-pain-debt-relief-grexit

Quote
"It will be high drama, I really don't know how this movie ends, and I try not to go to movies like that."
Warren Buffett on the Greek debt crisis - 2010 Berkshire annual meeting
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 12, 2015, 08:17:03 PM
http://www.wsj.com/articles/greek-debt-crisis-europe-pushes-athens-to-brink-with-bailout-ultimatum-1436745387

This is the first time I saw Mr. Tsipras not smiling on the media. Looks like the development is completely out of his plan. I bet he originally thought the worst case is that he will just agree with everything EU demanded before and he will get the deal on Sunday.

Now EU wants all reforms to be implemented before they can even talk about the deal? That's very surprising to me as well.
Title: Re: EGFEY - Eurobank
Post by: randomep on July 12, 2015, 09:13:38 PM
I am actually surprised by his about-face. Greece held all of the cards - when you owe someone hundreds of billions, it's their problem and not yours. I don't understand why he caved so quickly after the referendum.

Surely it doesn't take a rocket scientist to see that if you could print your own money, the currency devaluation would help Greece tremendously. So you wave that in front of the Euro-group leaders and threaten that your success will bring Spain and Italy with you and you demand haircuts on your debt to make it reasonably serviceable and for reasonable fiscal targets and boom...solved.

Instead, he folds....

I also thought the fear of Grexit would help drive a much stronger deal for Greece. The turmoil in the EU would be huge.....but here is an interesting commentary on his actions

http://www.bloombergview.com/articles/2015-07-10/el-erian-is-greece-s-tsipras-a-political-genius-or-lucky-

cheers
Zorro

Well it looks like there is a conception that Greece holds all the cards. Well, we'll find out because this week, because they will have a 2nd chance to Grexit.

As Graham always says the future is unknowable, and we tend to always have more confidence in our predictions than we should.  If they Grexit, there will be rioting on the streets. And that will be bad for Europe? I am not so sure. Who knows what will happen. Maybe the other PIIGs will see what can happen and work harder to stay within eurozone.

But watching this unfold I can see that Merkels got um.... balls....
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 13, 2015, 07:29:29 AM
http://www.wsj.com/articles/eurozone-leaders-reach-unanimous-agreement-on-greece-says-eus-tusk-1436771076?mod=trending_now_5

Looks like the events didn't unfold as SD predicted. Tsipras isn't that smart.  :)
He could have done this deal 5 months ago with better terms and harm the Greek economy less.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 13, 2015, 08:23:17 AM
I am actually surprised by his about-face. Greece held all of the cards - when you owe someone hundreds of billions, it's their problem and not yours. I don't understand why he caved so quickly after the referendum.

Surely it doesn't take a rocket scientist to see that if you could print your own money, the currency devaluation would help Greece tremendously. So you wave that in front of the Euro-group leaders and threaten that your success will bring Spain and Italy with you and you demand haircuts on your debt to make it reasonably serviceable and for reasonable fiscal targets and boom...solved.

Instead, he folds....

I also thought the fear of Grexit would help drive a much stronger deal for Greece. The turmoil in the EU would be huge.....but here is an interesting commentary on his actions

http://www.bloombergview.com/articles/2015-07-10/el-erian-is-greece-s-tsipras-a-political-genius-or-lucky-

cheers
Zorro

Well it looks like there is a conception that Greece holds all the cards. Well, we'll find out because this week, because they will have a 2nd chance to Grexit.

As Graham always says the future is unknowable, and we tend to always have more confidence in our predictions than we should.  If they Grexit, there will be rioting on the streets. And that will be bad for Europe? I am not so sure. Who knows what will happen. Maybe the other PIIGs will see what can happen and work harder to stay within eurozone.

But watching this unfold I can see that Merkels got um.... balls....

Yea. Maybe there is aspect to this that I'm missing. There's not attractive way forward for Greece, but at least a Grexit would bring with it the ability to devalue the currency and make Greece competitive again. I'm really surprised that Greece gave up so easily and would have expected them to have a better deal after the referendum. Europe has more potential loss from a Grexit than does Greece so you would've thought that Greece could've played hardball and won. Who knows what happened behind closed doors, but I'm floored by the result.
Title: Re: EGFEY - Eurobank
Post by: S2S on July 13, 2015, 08:56:06 AM
For those who still think Greece held/holds all the cards, here is the transcript from Varoufaki's most recent interview:
http://www.newstatesman.com/world-affairs/2015/07/yanis-varoufakis-full-transcript-our-battle-save-greece
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 13, 2015, 09:40:27 AM
For those who still think Greece held/holds all the cards, here is the transcript from Varoufaki's most recent interview:
http://www.newstatesman.com/world-affairs/2015/07/yanis-varoufakis-full-transcript-our-battle-save-greece

Greece lost all the cards as soon as Eurocrats realized that Greece is not prepared to Grexit.

They could only negotiate from position of strength if they were prepared to Grexit.

Not that the winners will be happy for long. It a Pyrrhic victory.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 13, 2015, 12:56:53 PM
This is where dumb and dumber get their heads handed to them.

They have effectively tried to stage a German coup d’état of the Greek government https://en.wikipedia.org/wiki/Coup_d%27%C3%A9tat
as the penalty for a EU member state not doing what it is told - when it is told. The only difference between this and 1938 German annexation of Austria http://www.history.com/this-day-in-history/germany-annexes-austria would seem to be no troops on the ground, and only the Germans are cheering. A new government in Germany, as soon as practicable, would very much seem to be in the long term health of all Europe.

Apparently trust only works one way; we take your collateral, and seize it if you do not pay. Of course, the other side of it is that we don’t service ANY of the 345B+ that we owe, until you let us back in. You threaten our banks, and we threaten yours. More importantly, we can PROVE that a Euro nation CAN go bankrupt, and walk away from its debts. And under Basel III all EU nation bonds will suddenly require more of a collateral haircut, and the amount will depend on the sovereign debt/GDP ratio. Congratulations to dumber for just reducing the capital ratios of most of the major European banks.

Greece is also a NATO member https://en.wikipedia.org/wiki/Member_states_of_NATO, but just exactly how are they supposed to now contribute -  as they cannot. Furthermore, they need the hard currency Putin is offering for putting the pipeline through http://rt.com/business/273223-russia-greece-energy-supplies/. Congratulations to dumber for threatening the common security interest of Europe. It is also highly unlikely the current Greek government can survive; and highly likely that its replacement will be more radical than what they have today. Another round to dumb and dumber for destabilizing Europe even more than it is currently.

The whole world, the IMF, and even the ECB recognize that Greece cannot possibly pay off its current debts, and that its people have given their Government the option to walk away - but apparently, not dumb and dumber. Nothing says a Grexit has to managed, and many would argue that it would be better if Greece just did an Iceland and told dumber to PFO. Mr Varoufakis http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece might even be persuaded to take the job back for a day – just to enjoy himself!

The euro experiment is over.

SD

Title: Re: EGFEY - Eurobank
Post by: randomep on July 13, 2015, 05:48:22 PM
This is where dumb and dumber get their heads handed to them.

They have effectively tried to stage a German coup d’état of the Greek government https://en.wikipedia.org/wiki/Coup_d%27%C3%A9tat
as the penalty for a EU member state not doing what it is told - when it is told. The only difference between this and 1938 German annexation of Austria http://www.history.com/this-day-in-history/germany-annexes-austria would seem to be no troops on the ground, and only the Germans are cheering. A new government in Germany, as soon as practicable, would very much seem to be in the long term health of all Europe.


...................

The euro experiment is over.

SD

Comon SD, don't relate this WWII, this is still not slaughter of millions of lives.......

Financial occupation has happened before, in fact, it has happened to Greece. I repeat, if the troika occupies Athens it is not the first time. And I am not talking about WWII.  In 1897 Germans did occupy Greece financially. But that is loooong forgotten and is nothing of the severity of WWII.

Why, then, would Greece not simply go down the same path today? The country has spent about a half of its history in a formal state of default. It defaulted on its first independence war loans in the 1830s, along with the Latin American countries. It defaulted again in 1843, in 1860 and in 1893. After the latter episode, German bondholders demanded international control over Greek finances — which they obtained with the establishment of the International Committee for Greek Debt Management following the Greco-Turkish war of 1897. Still, Greece managed to default again during the 1930s. None of these defaults occurred under radical governments.

And regarding your statement about euro being over..... comon, your predictions have been wrong..... and you still want to stick your neck out and make more predictions?
Title: Re: EGFEY - Eurobank
Post by: meiroy on July 13, 2015, 08:55:34 PM


The euro experiment is over.

SD

It could continue if Germany exists... Cough.

Within a year we will have a clearer picture, just need to see how much the Front National, Podemas and friends increase in coming elections.

Once it gets close to the tipping point, I wonder if the Germans will finally get sense and change internally or they will simply choose their own extreme political party.


Title: Re: EGFEY - Eurobank
Post by: influx on July 14, 2015, 03:31:09 AM
Greece economy was growing the 2nd fastest right before Tsipras came into power. And he interrupted that growth and throw the country into recession again.
EU's austerity measures worked in Ireland and Cyprus, and it seems working right before Tsipras came. Who should be blamed?

if this was true and growing 2nd fastest, and people felt that, then he would not be voted in power, no?
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 14, 2015, 05:32:23 AM
We are just off in the timing of the unraveling.

The deal has to pass the Greek parliament. And not be overturned by a future Greek government. Still to be determined.
Greek banks are going to have to open at some point. What they pay out, & how much, still to be agreed.
Euro scapegoats to wear the mess. More ruthless and much uglier political plays.
Containment. No longer a manageable problem.

Agreed that 1 year out it will look very different from what it looks like today. Unfortunately, almost assuredly worse.
There will be some new players, and very ugly removal of old ones.

Our own view is that Greece will do an Iceland, if not this round - then sometime in the reasonably foreseeable future.
How much help they get, depends on how inflexible some parties choose to be.

Agreed that on this board, there is no place for the German references. But in the real world they are going to be deliberately used to smear and target specific individuals, and the time-honoured approach is to stir the radical elements on all sides. World over, what cannot get resolved politically - typically gets resolved violently.

Disciplining is one thing, but most people recognize that beating the sh1t out of the errant is actually abuse.
We all have a responsibility to call it when we see it.

SD
Title: Re: EGFEY - Eurobank
Post by: influx on July 14, 2015, 05:41:16 AM
http://www.telegraph.co.uk/finance/economics/11736779/Greece-is-being-treated-like-a-hostile-occupied-state.html
And let us not forget that these primary surpluses never made any sense in the first place. They were not drawn up on the basis of macro-economic analysis. They were written into prior agreements because that is what would be needed – ceteris paribus – to pretend that debt is sustainable, and therefore that the IMF could sign off on the accords. What a charade.
...
Yet that is only half the story. We have also watched the EMU creditor powers bring a country to knees by cutting off the emergency liquidity (ELA) to the banking system.
...
Let there be no doubt, it was the decision by the European Central Bank to freeze ELA at €89bn two weeks ago that precipitated the final crisis and broke Syriza’s will to resist. The lines of authority on this episode are blurred. Personally, I do not blame the ECB’s Mario Draghi for this abuse of power. It was in essence a political decision by the Eurogroup.
But however you dress it up, the fact remains that the ECB is by its acts dictating a political settlement, and serving as the enforcement arm of the creditors rather than upholding EU treaty law.
It took a stand that further destabilised the financial system of an EMU member state that was already in grave trouble, and arguably did so in breach of its primary treaty duty to uphold financial stability. It is a watershed moment.
...
The summit document asserts with self-serving dishonesty that Greece’s debt has come off the rails due to the failure of Greek governments to stick to the Memorandum over the last year. Had this not occurred, the debt would still be sustainable.
This is a lie. Public debt ballooned to 180pc late last year – long before Syriza was elected – and even though the New Democracy government had complied with most Troika demands.
The truth is that Greece was already bankrupt in 2010. EMU creditors refused to allow a normal debt restructuring to take place because it would have led to instant contagion to Portugal, Spain, and Italy at a time when the eurozone had no lender-of-last resort or defences.
Title: Re: EGFEY - Eurobank
Post by: influx on July 14, 2015, 05:42:44 AM
Disciplining is one thing, but most people recognize that beating the sh1t out of the errant is actually abuse.
We all have a responsibility to call it when we see it.

SD

creditors should be disciplined too, no? :) the errant includes the creditor too..the creditor relied on the political force behind the eur project to credit such laid back country
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 14, 2015, 06:08:13 AM
The truth is that Greece was already bankrupt in 2010. EMU creditors refused to allow a normal debt restructuring to take place because it would have led to instant contagion to Portugal, Spain, and Italy at a time when the eurozone had no lender-of-last resort or defences.

This is true. I never really understood all of the drama around the potential Greek default. Greek needs a bailout from the EMU and IMF so it can afford to repay loans to the EMU and the IMF....it's a circular flow. Greece has been bankrupt for the past several years and will continue to be bankrupt for the foreseeable future. There is no debate about this - you can't argue with the numbers.

And yet....everyone freaks out if we threaten the charade that everyone knows is fake to begin with. I'll just never understand things like how this "default" would give us any new information about the risk of lending to Greece at the moment or how things like the implicit default through inflation is more palatable than an explicit default. None of it makes sense to me but everyone else seems to look at the statement A=B=C and somehow determine that C is more valuable than A.
Title: Re: EGFEY - Eurobank
Post by: Txvestor on July 14, 2015, 07:29:15 AM
This euro project is a joke. All it needs to completely unravel is one brave/bold leader to make preparations for exit and make a stink and leave and it will be over very quickly.
After observing the events of this weekend, I was left to conclude that the EU is a pretty raw deal for peripheral countries. To be sure they need to reform their societies as the world is a lot more competitive nowadays. However the attitude of the Germans towards their neighbours and trade partners and debtors also needs to change, otherwise they will gradually isolate themselves.
There was a punitive streak evident to me in the agreement.
Title: Re: EGFEY - Eurobank
Post by: constructive on July 14, 2015, 07:45:43 AM
http://www.telegraph.co.uk/finance/economics/11736779/Greece-is-being-treated-like-a-hostile-occupied-state.html
We have also watched the EMU creditor powers bring a country to knees by cutting off the emergency liquidity (ELA) to the banking system.
...
Let there be no doubt, it was the decision by the European Central Bank to freeze ELA at €89bn two weeks ago that precipitated the final crisis and broke Syriza’s will to resist.

So the ECB should just throw good money after bad indefinitely? Even if the greek banks look like they are on the edge of insolvency, and the government looks like it is about to default and possibly leave the Euro, the ECB should be forced to shovel bags of money into the furnace?

Borrowing money is not a right but a privilege. If the Greek government wanted emergency funding to continue, they should have behaved differently.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 14, 2015, 08:29:05 AM
http://www.telegraph.co.uk/finance/economics/11736779/Greece-is-being-treated-like-a-hostile-occupied-state.html
We have also watched the EMU creditor powers bring a country to knees by cutting off the emergency liquidity (ELA) to the banking system.
...
Let there be no doubt, it was the decision by the European Central Bank to freeze ELA at €89bn two weeks ago that precipitated the final crisis and broke Syriza’s will to resist.

So the ECB should just throw good money after bad indefinitely? Even if the greek banks look like they are on the edge of insolvency, and the government looks like it is about to default and possibly leave the Euro, the ECB should be forced to shovel bags of money into the furnace?

Borrowing money is not a right but a privilege. If the Greek government wanted emergency funding to continue, they should have behaved differently.

Agreed.  The crisis was going to come to a head at some point regardless; it probably should have happened years ago.  Here we have a country (Greece) that is relatively unproductive (or more generously less productive) and living well above their means while taking from more productive (or more hard working / less corrupt) citizens from neighboring countries to subsidize their lifestyle.  When after 3 bailouts the productive hard-working countries (such as Germany) decide they don't want their citizens subsidizing a country like Greece any further, all of a sudden they are the villain?  I really don't get it.  Charlie Munger is right about Greece.  These types of things are always cast as "rich vs. poor" but in reality this a a situation of productive / responsible vs. nonproductive / irresponsible.
Title: Re: EGFEY - Eurobank
Post by: Charlie on July 14, 2015, 08:31:39 AM
"We all have a responsibility to call it when we see it."

Munger on Euro strains: "You shouldn't create a partnership with your drunken, shiftless brother in law."  ;)
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 14, 2015, 08:42:23 AM
These types of things are always cast as "rich vs. poor" but in reality this a a situation of productive / responsible vs. nonproductive / irresponsible.

Ah, yes, the "productive / responsible" Germans who irresponsibly lent to Greece, but when the loans soured, they shifted them from German banks to EU taxpayers. Hey, that's really productive and responsible. NOT.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 14, 2015, 08:44:50 AM
"We all have a responsibility to call it when we see it."

Munger on Euro strains: "You shouldn't create a partnership with your drunken, shiftless brother in law."  ;)

Or if you do lend money to your brother in law out of kindness, and then realize he is drunken and shiftless, you owe it yourself to extricate yourself from the situation and stop lending more money.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 14, 2015, 08:53:02 AM
These types of things are always cast as "rich vs. poor" but in reality this a a situation of productive / responsible vs. nonproductive / irresponsible.

Ah, yes, the "productive / responsible" Germans who irresponsibly lent to Greece, but when the loans soured, they shifted them from German banks to EU taxpayers. Hey, that's really productive and responsible. NOT.

The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back. 
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 14, 2015, 08:57:02 AM
creditors should be disciplined too, no? :)


We think they will be http://www.spiegel.de/international/business/banks-in-europe-concerned-about-upcoming-ecb-run-stress-tests-a-956668.html

The ECB administers these stress tests; yet dumber choose to publicly dress down the head of the ECB over the weekend. The stress tests will haircut all euro-debt, & refusing to address the credit risk (when even the IMF says Greek debt levels are not sustainable) - just made those haircuts bigger, & further stressed the capital ratios. Way to go there buddy!

The article indicates German banks were vulnerable to shipping losses, and that many German banks were borderline. Pushing the Greek shipping lines closer to the wall just made everything worse, and those additional haircuts just brought everybody back to this time last year. On a roll there, buddy.

Deutsche Bank passes because ECB approves the bespoke methodology. And Deutsche Bank have just demonstrated that they were one on the more corrupt players in the recent LIBOR scandal. Dumber just raised the odds that the ECB takes a less forgiving view this time around - & will require another capital raise from all German banks this year. With friends like dumber .. who needs enemies!

Most would think that if you are a German banker, perhaps it is time for a new finance minister. Simply fire, and let new people, and new dynamics take you to a better place

Change the minister, or lose a good chunk of the party funding  ;)

SD

Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 14, 2015, 09:05:58 AM
The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Ah, but the banks won't. Such a nice play.

Quote
Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back.

You make the classic mistake of equating a loan from person to person to Greece situation. It is not the same. A country is not a person. You cannot resolve recession with permanent austerity. You cannot take country's sovereignty just because it owes you (try it with Argentina or Venezuela, good luck). To get out of the perma depression, country has to default and devalue instead of extend and pretend. And BTW, if Eurocrats allowed Greece to default and then provided help to it, it might cost less than the whole extending and pretending charade.

But actually even for person there are BK rules that might be less onerous than what Germany is trying to impose on Greece.

And BTW, do you think that, for example, Detroit should have been cut off the USD when it said that it was BK? Perhaps that was the right thing to do, no? That would have taught it a lesson: "If you default, no dollars for you, make your Detroit-drachma currency!".
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 14, 2015, 09:30:05 AM
These types of things are always cast as "rich vs. poor" but in reality this a a situation of productive / responsible vs. nonproductive / irresponsible.

Ah, yes, the "productive / responsible" Germans who irresponsibly lent to Greece, but when the loans soured, they shifted them from German banks to EU taxpayers. Hey, that's really productive and responsible. NOT.

The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back.

So that's why the U.S. banks were made out to be villains in 2008 and the people who borrowed the money to buy the mortgages they couldn't afford were largely treated as victims? Or is predatory lending not considered in your comment?

The fact of the matter is that Greece has largely been insolvent for years and EVERYONE has known it. The last default should tell you how ridiculous this saga is: Greece defaulted on it's private debt so it could be eligible for more loans that would leave it more indebted than it was prior to its default. It was a game of extend and pretend and that was supposed to fix all of it's problems.

Fast-forward a few years and now Greece needs a bailout from the same institutions that lent it money in the first place to repay those very loans? I was under the impression the EU and IMF could do basic math and that the "loans" were simply bailouts by another name to be more politically palatable. It appears I may have been wrong as it does seem that the EU expects to be repaid on them which begs the question: are they really that stupid?

"Hey Greece, you don't have enough money to pay your loans so I've got an idea! Default on your current loans and take an even bigger loan from me at super, super attractive rates. If you ever have any trouble paying that loan, I'll be happy to extend more to you with certain strings attached." Either this is predatory lending at it's finest, a bailout by another name, or European politicians are just really, really stupid.



Title: Re: EGFEY - Eurobank
Post by: Charlie on July 14, 2015, 09:37:28 AM
"On Europe, Buffett said he thought the Germans and others shouldn’t give into Greece’s demands for debt relief. He said that would be encouraging bad fiscal behavior that could get the Euro in further trouble. He said Europe would be better off cutting Greece loose if it had to. And Buffett gave his own folksy spin on the situation.

“If you have a dog peeing on your carpet, you do not want to start giving it a bunch of dog biscuits,” said Buffett."  ;)

http://fortune.com/2015/03/02/warren-buffett-i-would-have-passed-keystone/
Title: Re: EGFEY - Eurobank
Post by: wachtwoord on July 14, 2015, 11:18:18 AM
These types of things are always cast as "rich vs. poor" but in reality this a a situation of productive / responsible vs. nonproductive / irresponsible.

Ah, yes, the "productive / responsible" Germans who irresponsibly lent to Greece, but when the loans soured, they shifted them from German banks to EU taxpayers. Hey, that's really productive and responsible. NOT.

The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back.

I truly don't understand why anyone would lend to any nation state if the posessions and land of the country is notbthe collatoral. Just lend to companies instead.

Just so we're clear: I consider all possessions of Greece  are collatoral which should be seized and divided amoung the creditors. If tanks are needed for this so be it.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 14, 2015, 12:05:42 PM
Quote from TwoCitiesCapital:
"So that's why the U.S. banks were made out to be villains in 2008 and the people who borrowed the money to buy the mortgages they couldn't afford were largely treated as victims? Or is predatory lending not considered in your comment?"

So you are comparing a poor / lower class semi-literate American family being encouraged to take a bad loan relative to the PhD economists that are running Greece?  Really?  I can certainly see predatory lending in the former case - most of these people did not understand the loans they were receiving.  In the latter case, not so much.  The Greek government officials are at least on par with their European counterparts in terms of sophistication / education.  More likely this was predatory borrowing then predatory lending.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 14, 2015, 12:28:35 PM
The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Ah, but the banks won't. Such a nice play.

Quote
Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back.

You make the classic mistake of equating a loan from person to person to Greece situation. It is not the same. A country is not a person. You cannot resolve recession with permanent austerity. You cannot take country's sovereignty just because it owes you (try it with Argentina or Venezuela, good luck). To get out of the perma depression, country has to default and devalue instead of extend and pretend. And BTW, if Eurocrats allowed Greece to default and then provided help to it, it might cost less than the whole extending and pretending charade.

But actually even for person there are BK rules that might be less onerous than what Germany is trying to impose on Greece.

And BTW, do you think that, for example, Detroit should have been cut off the USD when it said that it was BK? Perhaps that was the right thing to do, no? That would have taught it a lesson: "If you default, no dollars for you, make your Detroit-drachma currency!".

Yes not the same, but more similar than different; when you borrow money, whether as a person or a country, you should do your best to try and pay it back.

"You cannot resolve recession with permanent austerity."
That seems to be one of those blanket types of absolute statements that is unprovable and should not be made.

"You cannot take country's sovereignty just because it owes you"
That is not what is happening.  The European countries are saying that, hey, if you want to borrow MORE money from us, you have to take steps to put your affairs / fiscal house in order to make it more likely you will be able to repay the loan.  Which of course is eminently reasonable. 

Detroit should have been required to take steps to change its overspending ways as a condition for receiving financial assistance, much like Greece is now.  I guess I am old fashioned in believing in the concept of personal responsibility for one's actions, whether you be an individual or a government.  Buffett's analogy of the peeing dog is quite appropriate.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 14, 2015, 12:45:24 PM
Curious why Prem is constructive on Greece. He has been quoted as saying Greece has several advantages. I wonder what he thinks they are. He is obviously ignoring the message from the crowd, which appears quite negative. The crowd seems to think Greece and Euro are hopeless. Prem sees opportunity. Quite interesting really. Were any of the posters on this board long EGFEY throughout the recent crises? What is their input? I suspect the majority of the comments on this thread are coming from people with no position. Nothing wrong with that. But might be interesting to hear the long view.
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 14, 2015, 01:25:32 PM
"You cannot resolve recession with permanent austerity."
That seems to be one of those blanket types of absolute statements that is unprovable and should not be made.

Well, after the great recession, we pretty clearly know that stimulative measures work and austerity does not. If you do not believe that, look at USA vs Greece, Spain, etc. If you still don't believe it, then there's no point for further discussion.

So you are comparing a poor / lower class semi-literate American family being encouraged to take a bad loan relative to the PhD economists that are running Greece? Really?

So you are telling us that the PhD economists will be the ones suffering from the austerity Germans inflict on Greece? Really?

Don't have any illusions that austerity will mostly hit the "nonproductive / irresponsible" who exploited the system and defrauded it. No. It will hit mostly the people who are in the country because they have no other option (emigrate) and who were not smart enough to exploit the system and then move the money offshore.

You say that all Greeks should take responsibility for the actions of their government and fraudsters? This might seem noble to you, but it is terribly naive. I doubt many people in US believe that they have responsibility for the actions (and debts) of their government. In more corrupt countries even fewer people do. Rich can find ways to escape the responsibility and the poor are left under the gun to "take" it. That's how it goes.
Title: Re: EGFEY - Eurobank
Post by: randomep on July 14, 2015, 04:35:56 PM

I just read the first mention of the drachma but Tsipras. Tsprisas said "we do not have enough reserves to make a return to the drachma".  Finally, some plausible explanation.  So posters on this board who say Greece is better off with Drachmas, should address the reserves issue.

Title: Re: EGFEY - Eurobank
Post by: meiroy on July 14, 2015, 06:29:40 PM

I just read the first mention of the drachma but Tsipras. Tsprisas said "we do not have enough reserves to make a return to the drachma".  Finally, some plausible explanation.  So posters on this board who say Greece is better off with Drachmas, should address the reserves issue.

My understanding of that is that by changing to the Drachma they still would not be able to maintain current standard of living. But they cannot do that anyhow by continuing to borrow endlessly. It's a choice between bad or worse, not bad or good. Greece is a semi-failed state, far closer to Russia than to Spain or France. (so for the person who asked why is this such a big deal, it's because it's not about Greece, it's about Portugal, Spain, Italy, or rather the impact Germany has on these countries due to various reasons.)
Title: Re: EGFEY - Eurobank
Post by: cwericb on July 14, 2015, 06:31:28 PM
Been in the credit industry for my whole life.

It takes two to get someone into financial trouble. The person who borrows and the person who grants the credit. This has been proved over and over and it’s not rocket science. But many, many lenders refuse to take responsibility for their part in the equation.
Title: Re: EGFEY - Eurobank
Post by: Spekulatius on July 14, 2015, 07:27:23 PM
The German taxpayers will take a big hit if and when Greece defaults, to the tune of $80 or $90 billion or so. 

Ah, but the banks won't. Such a nice play.

Quote
Lending to a neighboring country who needs money turns out in hindsight to have been a bad decision obviously.  But IMO when a loan default occurs the irresponsibility largely lies with the entity that does not pay back the money loaned to them.  I suspect that some of the young posters on this board have never stood in the shoes of a creditor, but you think about things a little differently when it is your hard earned money on the line that is not being paid back.

You make the classic mistake of equating a loan from person to person to Greece situation. It is not the same. A country is not a person. You cannot resolve recession with permanent austerity. You cannot take country's sovereignty just because it owes you (try it with Argentina or Venezuela, good luck). To get out of the perma depression, country has to default and devalue instead of extend and pretend. And BTW, if Eurocrats allowed Greece to default and then provided help to it, it might cost less than the whole extending and pretending charade.

But actually even for person there are BK rules that might be less onerous than what Germany is trying to impose on Greece.

And BTW, do you think that, for example, Detroit should have been cut off the USD when it said that it was BK? Perhaps that was the right thing to do, no? That would have taught it a lesson: "If you default, no dollars for you, make your Detroit-drachma currency!".
I feel bad for the Greek people but they really brought this to themselves. How could they go into a negotiation with a pretty much binary outcome and not even have plan B (exit and introduction of the New Drachma)? Their government was not prepared to do this (not even an attempt was made), I they really had not choice but to accept the raw deal? And how the Greeks even expect a better deal, the way their current lead ship was behaving and pretty much negating every single promise ever given?

What their government should have done after the referendum is to prepare for an exit from the Euro and then let it go head or tails. I think they may even  a deal to sweaten the exit by the EU (who are more or less glad to let them go). An exit from the EU and the Euro would have the Greeks decide their own destiny, they could chose to default in a restructuring of by inflation. It would have been tough too for the Greeks but with a better chance of recovery in the long run. As it seems, they were not willing or able to do this, so now lose control of their own fiscal policies. They may be mad about the German now,  but really should be mad about their own government, which apparently likes to gamble without holding even cards in the hand, not even weak ones.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 14, 2015, 07:38:36 PM
Curious why Prem is constructive on Greece. He has been quoted as saying Greece has several advantages. I wonder what he thinks they are. He is obviously ignoring the message from the crowd, which appears quite negative. The crowd seems to think Greece and Euro are hopeless. Prem sees opportunity. Quite interesting really. Were any of the posters on this board long EGFEY throughout the recent crises? What is their input? I suspect the majority of the comments on this thread are coming from people with no position. Nothing wrong with that. But might be interesting to hear the long view.

I've got a small position in Eurobank that was established at prices that were around 1-2x moderately normalized earnings. I might even add to it as this situation develops and when the stock starts trading again.

Basic reasoning is that at 1-2x earnings they fully reflected the pessimism and risk of the situation and that if it didn't go wrong then you have a good position in a bank that has generally earned sizable NIM spreads and ROE. Basically, it's a coinflip - lose a little bit of money or end up with a decent amount in a highly profitable bank, but I definitely thought the possibility of a Grexit was overblown and that we'd reach an 11th hour deal (as can be seen from all of my previous comments).

I'm just surprised that Greece is on the losing side of that deal...
Title: Re: EGFEY - Eurobank
Post by: kiwing100 on July 14, 2015, 08:09:58 PM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders? 
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 14, 2015, 08:29:15 PM
This sounds really sick, but we don’t think they will have a problem getting funds to recapitalize.

The ECB is being forced to keep the Greek banks afloat, and it is the ONLY lender there is. It is expensive, there is no end to the drip, and they know they are not going to see the money again. Funding a one-time deal, to facilitate a switch to Drachma, is actually a central bank obligation; and they would be happy to do it - to escape the drip. It would very likely also come with an IMF agreement to extend term on whatever defaulted Greek debt they have at the time.

If the write-offs & term extensions come to pass; 1-2 years out, all their major banks are probably going to be a very good deal. Simply because they are the primary distribution channel by which the population obtains their currency to buy the everyday necessities of life. There is also the very strong likelihood that following recapitalization they would be tightly ring fenced, temporarily regulated by a neutral third party (BoE, BoC, etc.) until they are back on their feet, and would have some of the highest capital ratios in Europe. We are long term bullish on Greece and hedged our National Bank shares in anticipation of a nationalization & future recapitalization, following which we would probably re-enter. So far, it has been the right decision.

Those who can quietly help them in these acute days of need, are very likely going to benefit from it for many years to come. The relationship between Canada & Holland, following WWII liberation, being a good example.

It is truly extraordinary to have both the IMF, and one of the major global central banks standing in the deadbeat’s corner; fighting tooth and nail for them. It is an indication of just how abusive this process has become, and how serious an impediment it has now become to ALL of us moving forward again.

The real problem is the Euro-zone and the refusal to recognize that a political and currency union are NOT the same thing. The technical economic problems, and their solutions, have long been known; the difficulty has been the lack of political will.

We see the problem as being one of attitude; and we don’t really see it changing until dumber is cut loose. Make it a choice between losing power, or losing a minister - and the decision is obvious.

SD
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 14, 2015, 09:14:31 PM
I feel bad for the Greek people but they really brought this to themselves. How could they go into a negotiation with a pretty much binary outcome and not even have plan B (exit and introduction of the New Drachma)? Their government was not prepared to do this (not even an attempt was made), I they really had not choice but to accept the raw deal? And how the Greeks even expect a better deal, the way their current lead ship was behaving and pretty much negating every single promise ever given?

What their government should have done after the referendum is to prepare for an exit from the Euro and then let it go head or tails. I think they may even  a deal to sweaten the exit by the EU (who are more or less glad to let them go). An exit from the EU and the Euro would have the Greeks decide their own destiny, they could chose to default in a restructuring of by inflation. It would have been tough too for the Greeks but with a better chance of recovery in the long run. As it seems, they were not willing or able to do this, so now lose control of their own fiscal policies. They may be mad about the German now,  but really should be mad about their own government, which apparently likes to gamble without holding even cards in the hand, not even weak ones.

Did you read Varoufakis' interview? ( One source: http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece ) Apparently he had plan B and was prepared to issue IOUs, haircut the debt and seize Bank of Greece. But he was voted down by Tsipras and co.

I agree though: they should have had plan B and they should have enacted it when it was clear that the negotiations are not working.
Title: Re: EGFEY - Eurobank
Post by: Spekulatius on July 15, 2015, 04:00:15 AM
I feel bad for the Greek people but they really brought this to themselves. How could they go into a negotiation with a pretty much binary outcome and not even have plan B (exit and introduction of the New Drachma)? Their government was not prepared to do this (not even an attempt was made), I they really had not choice but to accept the raw deal? And how the Greeks even expect a better deal, the way their current lead ship was behaving and pretty much negating every single promise ever given?

What their government should have done after the referendum is to prepare for an exit from the Euro and then let it go head or tails. I think they may even  a deal to sweaten the exit by the EU (who are more or less glad to let them go). An exit from the EU and the Euro would have the Greeks decide their own destiny, they could chose to default in a restructuring of by inflation. It would have been tough too for the Greeks but with a better chance of recovery in the long run. As it seems, they were not willing or able to do this, so now lose control of their own fiscal policies. They may be mad about the German now,  but really should be mad about their own government, which apparently likes to gamble without holding even cards in the hand, not even weak ones.

Did you read Varoufakis' interview? ( One source: http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece ) Apparently he had plan B and was prepared to issue IOUs, haircut the debt and seize Bank of Greece. But he was voted down by Tsipras and co.

I agree though: they should have had plan B and they should have enacted it when it was clear that the negotiations are not working.

I read this but also take it with a grain of salt. If Tsipras indeed voted the plan down, he bears a lot of responsibility - well he bears a lot of responsibility anyways, because he is in charge. Tsipras pretty much is a big hindrance, he irks everyone he is dealing wit in the EU, yet does not seem to be able to make hold decisions either, always appearing like a victim.
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 15, 2015, 06:25:13 AM
Spekulatius, yes, I agree that is a clusterf&*k from both sides and obviously the information is one sided.
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 15, 2015, 08:10:43 AM
Quote from Jurgis:
"Well, after the great recession, we pretty clearly know that stimulative measures work and austerity does not."

That is very interesting.  Let's explore that a bit. 

I would posit that the U.S. will eventually come out of a recession regardless of any government policy; these things are cyclical, subject to the nature of the economic cycle; confidence would eventually come back, etc., etc.  Perhaps without certain government polices it would take longer for the recession to end.  Perhaps certain government polices make it worse.

We don't want to make the classic mistake of confusing correlation with causation here.

So the real question is not whether certain government polices bring the country out of recession, but whether these policies hasten the end of the recession or lessen the pain somehow, or perhaps whether they prolong it.
What we do know is that:  1) we in the US have had fiscal stimulus on a massive scale, more so than after past recessions; and 2) the recovery in the US has been slow and anemic relative to recoveries from past recessions.
The above alone might prevent someone from making a blanket statement that "we pretty clearly know that stimulative measures work."   
There are many that argue the fiscal stimulus has actually delayed the recovery.  I saw an interesting article that calculated the amount of interest income savers would have earned had interest rates remained "normal" the past 6 years, and that amount alone would have been quite stimulative in the private economy.  I tend to think these academics at the Fed greatly overestimate their ability to control anything in the economy (illusion of control bias).

Really these things are not provable; there is no way to go back in time and see what would have happened in the US without all of the stimulus.  There is no way to tell if certain countries (such as Greece) would have remained an economic mess with or without austerity or stimulus.  So making such a blanket assertion that "we pretty clearly know" something like this raises my intellectual red flags.  You MAY be right, but may not be.

As Mark Twain said  "It's not what you don't know that gets you into trouble, it's what you know for sure that just ain't so."

The other question is whether the purported benefit of all of this stimulus in supposedly hastening the end of the recession is worth the additional debt load and potential after-affects (such as inflation down the road, harm to savers, etc.).  As Buffett has said, this is a grand experiment. 
Title: Re: EGFEY - Eurobank
Post by: Rainforesthiker on July 15, 2015, 08:27:45 AM

So you are telling us that the PhD economists will be the ones suffering from the austerity Germans inflict on Greece? Really?

Don't have any illusions that austerity will mostly hit the "nonproductive / irresponsible" who exploited the system and defrauded it. No. It will hit mostly the people who are in the country because they have no other option (emigrate) and who were not smart enough to exploit the system and then move the money offshore.

You say that all Greeks should take responsibility for the actions of their government and fraudsters? This might seem noble to you, but it is terribly naive. I doubt many people in US believe that they have responsibility for the actions (and debts) of their government. In more corrupt countries even fewer people do. Rich can find ways to escape the responsibility and the poor are left under the gun to "take" it. That's how it goes.

I don't entirely disagree with your statements above (except for the naive insult); but I think they miss the point.  Someone is going to suffer here; it is unavoidable.  The real question here is WHO should suffer.  Should the people who live in the underperforming country that is living above its means suffer?  Or should the citizens in the neighboring countries suffer having to keep bailing them out.  At least the people who live in Greece have some ability to affect change in their own country and their own government; based on the recent referendum a majority believe that nothing should change in their bankrupt country, which is somewhat baffling.  Yes a lot of innocent hardworking Greeks will suffer; that is certainly a shame; but IMO better them than innocent taxpayers in other countries.  Perhaps this will be the impetus for change in Greece.

I also think the US may have its "Greece" moment at some point in the far future.  And yes I think US citizens will and should suffer as we have continually voted in politicians who spend recklessly, and as a whole current US citizens have benefited while placing huge debt loads on future generations. 
Title: Re: EGFEY - Eurobank
Post by: Jurgis on July 15, 2015, 09:06:33 AM
Someone is going to suffer here; it is unavoidable.  The real question here is WHO should suffer.  Should the people who live in the underperforming country that is living above its means suffer?  Or should the citizens in the neighboring countries suffer having to keep bailing them out.

The suffering is not symmetrical, so your question is not well constructed.

You could argue the same way for Versailles reparations and against Marshall plan.

BTW, your question is not well constructed for another reason too: Greece is BK. There is no way the lenders are getting their money and interest back. The only question is whether they face it right now or extend and pretend. And how much pain is inflicted on Greece in the meantime.

I am not saying Greeks are innocent. I think it's a clusterf&*k on both sides - somewhat also how it was in US real estate bubble. It's worse with Greece though. In some sense, my ideal plan would be: write off debts, install independent uncorruptible government, that wields both Marshall plan and tough reforms. But I'll call myself naive (so you don't feel insulted  ;) ), since this is not realistic. I just think that the current plan is almost the worst possible, since it is almost everything opposite to what I think good plan would be.

Take care
Title: Re: EGFEY - Eurobank
Post by: Zorrofan on July 15, 2015, 11:46:16 AM
Someone is going to suffer here; it is unavoidable.  The real question here is WHO should suffer.  Should the people who live in the underperforming country that is living above its means suffer?  Or should the citizens in the neighboring countries suffer having to keep bailing them out.

The suffering is not symmetrical, so your question is not well constructed.

You could argue the same way for Versailles reparations and against Marshall plan.

BTW, your question is not well constructed for another reason too: Greece is BK. There is no way the lenders are getting their money and interest back. The only question is whether they face it right now or extend and pretend. And how much pain is inflicted on Greece in the meantime.

I am not saying Greeks are innocent. I think it's a clusterf&*k on both sides - somewhat also how it was in US real estate bubble. It's worse with Greece though. In some sense, my ideal plan would be: write off debts, install independent uncorruptible government, that wields both Marshall plan and tough reforms. But I'll call myself naive (so you don't feel insulted  ;) ), since this is not realistic. I just think that the current plan is almost the worst possible, since it is almost everything opposite to what I think good plan would be.

Take care

So, if i may paraphrase Winston Churchill, we can count on the EU & Greece to do the right thing after all other possible options have been exhausted?  You have a good idea though, too bad politicians have to be involved   :D

cheers
Zorro
Title: Re: EGFEY - Eurobank
Post by: MrB on July 15, 2015, 12:55:12 PM
Just as the rich rule the poor, so the borrower is servant to the lender
Title: Re: EGFEY - Eurobank
Post by: wachtwoord on July 16, 2015, 12:15:58 AM
Someone is going to suffer here; it is unavoidable.  The real question here is WHO should suffer.  Should the people who live in the underperforming country that is living above its means suffer?  Or should the citizens in the neighboring countries suffer having to keep bailing them out.

The suffering is not symmetrical, so your question is not well constructed.

You could argue the same way for Versailles reparations and against Marshall plan.

BTW, your question is not well constructed for another reason too: Greece is BK. There is no way the lenders are getting their money and interest back. The only question is whether they face it right now or extend and pretend. And how much pain is inflicted on Greece in the meantime.

I am not saying Greeks are innocent. I think it's a clusterf&*k on both sides - somewhat also how it was in US real estate bubble. It's worse with Greece though. In some sense, my ideal plan would be: write off debts, install independent uncorruptible government, that wields both Marshall plan and tough reforms. But I'll call myself naive (so you don't feel insulted  ;) ), since this is not realistic. I just think that the current plan is almost the worst possible, since it is almost everything opposite to what I think good plan would be.

Take care

Greece is NOT BK. They have a shit ton of gold. Further they posses art, historical artifacst and a ton of land. Claim all and divide amoungst the lenders.
Title: Re: EGFEY - Eurobank
Post by: kab60 on July 16, 2015, 02:57:35 AM
And then what? Creditors earn interest because there's a chance they won't get their money back. I'm pretty sure they did not ask for Akropolis as collateral. The idea of confiscating Greeces gold, art, whatever reminds me of the Versailles pact and look what happened to Germany in the 20ties and 30ties. Sure, Greece won't start a world war but it would be fuel for nationalistic pigs. Both sides bear a responsibility for this mess, but unfortunately it will be the public who pays more so than the private creditors who knew and calculated all along that they would be bailed out. Greece are in need of major reforms - and a major debt haircut.



Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 16, 2015, 10:24:11 AM
Creditors earn interest for the temporary use of their capital. What you say is nonsense.

That Versailles comment shows you're good at repeating what you were taught in school (by socialists). WW2 started because the UK and France were fucking pussies (giving Germany Czech republics defences and condoning the occupation of Austria) and because the USA didn't give a fuck.

Somewhere, I think you left out the aggressor and the aggressor's motivations. A war certainly can't be the fault of nations who didn't start it nor those who didn't participate until it was half way over....
Title: Re: EGFEY - Eurobank
Post by: kab60 on July 16, 2015, 12:57:00 PM
Creditors earn interest for the temporary use of their capital. What you say is nonsense.

That Versailles comment shows you're good at repeating what you were taught in school (by socialists). WW2 started because the UK and France were fucking pussies (giving Germany Czech republics defences and condoning the occupation of Austria) and because the USA didn't give a fuck.
Sorry if I was imprecise, I'm sure you know what I meant. Rates go up according to risk. Never think I had a Socialist teacher, but thanks for the history lesson. Somehow I think you forgot the rise of Hitler. Don't want to put it all on Der Führer, but I'm sure he - and the German struggles in the 30ties - played a minor part as well. I don't want to start a fight, but you might one to read this article (though some think he's a Socialist). I just read it today and thought it was worth my time: http://thewire.in/2015/07/08/thomas-piketty-germany-has-never-repaid-its-debts-it-has-no-right-to-lecture-greece-5851/
Title: Re: EGFEY - Eurobank
Post by: wachtwoord on July 16, 2015, 01:24:18 PM
True Germany should have paid after WW2 (just like after WW1) but the allied pussied out (with that whole Versailles caused WW2 bs they try to spin on us in school). The Germany of today is not the Germany of '45 and you cant make them pay now.

Greece should be forced to pay now, not in 70 years. Just take the collatoral. If you dont everyone will take advantage of you.
Title: Re: EGFEY - Eurobank
Post by: kmukul on July 16, 2015, 08:34:38 PM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?
Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

Thanks a lot everyone
Title: Re: EGFEY - Eurobank
Post by: investor-man on July 16, 2015, 09:28:12 PM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?
Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

Thanks a lot everyone

The Athens Exchange is closed and has been since they imposed capital controls. I'd imagine it'll open back up soon since the ECB is now providing emergency funds
Title: Re: EGFEY - Eurobank
Post by: morningstar on July 17, 2015, 06:42:44 AM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?
Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

Thanks a lot everyone

For now, the stock is just halted along with other Athens-listed stocks.

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.
Title: Re: EGFEY - Eurobank
Post by: MrB on July 17, 2015, 07:36:22 AM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?
Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

Thanks a lot everyone

For now, the stock is just halted along with other Athens-listed stocks.

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.
Wouldn't this also apply to NBG and NBG-PA, which currently trade at P/BV of 0.37x ??
Surely the market would have priced those at 0 by now?
Title: Re: EGFEY - Eurobank
Post by: morningstar on July 17, 2015, 08:25:34 AM

Will Eurobank need a recapitalisation?

If so, does anyone know what will be the impact of a recapitalisation of Eurobank and the impact on existing shareholders?
Any body wants to talk about the impact of this on Eurobank? the bank has stopped trading. Is it halted or have some other meaning.

Thanks a lot everyone

For now, the stock is just halted along with other Athens-listed stocks.

A lot of money, €25bn, has been set aside in the  to recapitalize Greek banks. One measure Greece is supposed to pass is its implementation of Europe's Bank Recovery/Resolution Directive, which calls for junior stakeholders to bear losses in any state bailout. It's very probable that existing shareholders in Eurobank will be wiped out. Subordinated debt holders too. The "fulcrum security" is probably the senior bonds, which are quoted @ 35 cents on the dollar.... will be interesting to see what happens with them.
Wouldn't this also apply to NBG and NBG-PA, which currently trade at P/BV of 0.37x ??
Surely the market would have priced those at 0 by now?

I certainly wouldn't want to be long those either. I'm highly skeptical that any of the 4 major Greek banks still have significant equity value after this 3 week bank suspension, and nothing the Eurogroup has done so far indicates to me that a (pointless) bailout of private equityholders is on their agenda. We'll see though - not a holder of any of these securities so I haven't followed exactly in what format Greece has agreed to transpose the BRRD.

I think the best model however for what's likely to occur is the Espirito Santo restructuring last year in which shareholders were wiped.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 17, 2015, 08:46:21 AM
I am surprised that the Athens exchange still hasn't resumed trading and capital control is still in place. Does ECB plan to choke Greece to death even after the bailout deal?  :o
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 17, 2015, 09:22:17 AM
Wilbur Ross has made several recent TV appearances. He didn't mention anything about his investment being wiped out in a restructuring. In fact, he reiterated that EGFEY has a liquidity issue, not a solvency issue. He believes his equity investment will be successful. He mentioned that once the deal is signed, deposits will slowly but surely come back, just like they did last time. ELA should provide liquidity until then. Granted, there are high loan loss provisions, but why was Wilbur unconcerned and convinced that EGFEY is solvent. Shouldn't he know a thing or two about his investment.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 17, 2015, 09:45:37 AM
Wilbur Ross has made several recent TV appearances. He didn't mention anything about his investment being wiped out in a restructuring. In fact, he reiterated that EGFEY has a liquidity issue, not a solvency issue. He believes his equity investment will be successful. He mentioned that once the deal is signed, deposits will slowly but surely come back, just like they did last time. ELA should provide liquidity until then. Granted, there are high loan loss provisions, but why was Wilbur unconcerned and convinced that EGFEY is solvent. Shouldn't he know a thing or two about his investment.

Let's see when capital control will be lifted. Usually after it is lifted, people will withdraw cash for a while and then put the money back. There are $43 bn cash hidden under the mattress that they can give back. This will help a lot to reduce the ELA by half.
Title: Re: EGFEY - Eurobank
Post by: randomep on July 17, 2015, 07:54:32 PM

Can someone plz educate me:

If one suspects that any Greek bank is insolvent. It really means assets are less than liabilities.  How exactly did the bank assets shrink? is it that Greeks are defaulting en-mass? or is it that banks own government debt which the government cannot pay back?
Title: Re: EGFEY - Eurobank
Post by: kiwing100 on July 17, 2015, 11:08:11 PM

The bank may be solvent on the latest balance sheet but as I saw Mario Draghi in the press conference, they also consider the forward looking equity.

Let's take a quick look at the assets which are likely to be subject to revaluation and hence impact the bank's prospective equity:

Preliminary estimates would suggest a total of Euro 45,405 mn (1225% of common equity) would be in this basket at the very least

All figures taken from the bank only financial statements at March 2015 which would exclude offshore bank assets in their subsidiaries in Cyprus, Bulgaria, Romania, Serbia and Ukraine and less likely subject to writedown if we focus mainly on the events in Greece.


1  Net loans 20,064mn (958% of common equity) - this assumes that all wholesale loans have no credit risk and all the provisioning made relates to non wholesale loans.  It also assumes that all the loans are made domestically within Greece and not offshore loans .

This is mainly mortgage lending, consumer lending, and small business lending.  With the deterioration in the business environment, small business lending is likely to require further provisioning.  If there are cuts to pensions and welfare payments, and higher unemployment rates, then mortgage lending and consumer lending will require additional provisioning due to increased risk of borrower's inability to meet debt repayments to the bank.  Also the collateral is probably falling in price. 

Note that wholesale loans are 416% of common equity so that is additional exposure should there be credit risk.  I'm not sure of the nature of wholesale lending - if it is to other financial institutions, or large corporates.

2. Investment securities 3,749mn (101% of common equity)

These are Greek sovereign securities only - Greek bonds & Greek treasury bills. 2,157 mn is Greek treasury bills (58% of common equity).  These securities will be subject to mark to market, but not sure what the ultimate recovery value of these assets will be as these securities may need to be restructured.

3. Derivative assets 2,215 mn (60% of common equity)

Not sure what the market value of these assets are given market price movements.   There is an offsetting derivative liability of 3,159mn but unsure if these are truly offsetting. The worse scenario would be that the derivative asset could fall in value, and the derivative liability (85% of common equity) increase in value which would have a magnified impact on the common equity.

4. Deferred tax assets 3,948 mn (107% of common equity)

Uncertain what value these assets will have given that this is a result of tax credits given by the Greek government for previous losses of the bank.






Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 18, 2015, 05:40:38 AM
Every one of these situations is different & extremely fluid in its first few days.

Typically there is an initial run. Folks need to pay bills, & the fearful rush to draw out what they can, while they can. Everybody says calming things & prays they can meet the drawdown.

Loan values initially plummet on uncertainty. The last 3 weeks may well have pushed a good number of commercial loans under. Similar thing with mortgages entering the early stages of default. It does not mean they will ultimately default, but it does mean that the amount the bank can currently borrow against them will have dropped like a brick.

As in every sovereign, the majority of the domestic bank reserves are invested in domestic sovereign bonds. Even in a stable market those Greek sovereign bonds would not be worth very much; with every bank selling, & no buyers - they are worth even less, if you could sell them at all.

On day 1 the existing equity is very likely worthless; on day 30 it is probably worth more – if only because the bank has withstood the liquidity run. On day 1 – who that may be, and how much they may be worth, is a crap shoot.

At around 45-60 days there is usually sufficient stability to allow a recapitalization and restructuring of all the asset portfolios to meet the changed conditions. Interest holidays, term extensions, etc. with the cumulative offsetting liabilities being passed through to the sovereign central bank.

Long term it is often a very good opportunity, but you have to treat every $ of initial new investment as an immediate 100% write-off.

Different strokes.

SD

Title: Re: EGFEY - Eurobank
Post by: muscleman on July 18, 2015, 07:46:54 AM
I am surprised that after so many days, capital control is still not lifted.
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 18, 2015, 10:20:45 PM
http://www.ibnlive.com/news/world/greek-banks-to-reopen-on-monday-as-revamped-cabinet-gets-to-work-1022391.html

Finally, the banks will reopen. Does this mean complete lift of capital control?
Title: Re: EGFEY - Eurobank
Post by: kiwing100 on July 19, 2015, 06:24:53 AM

Investors in Greek Banks Face Wipeout on Recapitalization

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 19, 2015, 09:20:39 AM
http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?
Title: Re: EGFEY - Eurobank
Post by: Spekulatius on July 19, 2015, 10:09:50 AM
http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?
Because the Greeks know too well that the situation is still precarious and would probably withdraw a lot of funds and starve their banks of deposits. It will take a while to get the confidence restored.
Title: Re: EGFEY - Eurobank
Post by: randomep on July 19, 2015, 12:39:14 PM


So, why did Cyprus decide on the depositor haircut? Because the banks had liquidity problems? or because the banks were insolvent, and if the latter then why were the banks insolvent?

Also in the event of a depositor haircut as in Cyprus, is this across all personal accounts or same for business?
Title: Re: EGFEY - Eurobank
Post by: morningstar on July 19, 2015, 01:43:52 PM
http://www.reuters.com/article/2015/07/19/us-eurozone-greece-idUSKCN0PT0FV20150719

Greek banks expect long queues but no major problems when they reopen on Monday for the first time in three weeks, although withdrawals will still be limited and capital controls will remain, senior banking officials said on Sunday.

The head of Greece's banking association Louka Katseli urged Greeks, who will be able to withdraw 420 euros a week at once instead of just 60 euros a day, to put their money back.

The joke still continues...... What the heck is the usefulness to reopen the bank but still have withdraw limit in place? How can that restore confidence and convince people to put the money back? Why is ECB not lifting the ELA limit to allow Greek banks to reopen with no withdraw limit so confidence can be truly restored?

The usefulness is that people have cash for basic expenses like food. If the withdrawl limit were lifted the deposit flight would wipe out the banking system... Even if the ELA limit were not in place, available collateral in the Greek system would not be sufficient.

Small steady increases in ELA for the time being should fund the controlled withdrawals until the banks can be recapitalized - the cash provided in the recap would provide liquidity to open the banks more completely.

I think deposit haircuts are unlikely here - part of the upside of this deal for Greece is that the Eurogroup looks willing to recap the banks without depositor loss-bearing, even though this is probably a money-losing proposition for Germany et al. I do still this equity and sub debt holders face effective wipeout. The senior bonds are the interesting gray area for investors, I think.
Title: Re: EGFEY - Eurobank
Post by: Spekulatius on July 19, 2015, 04:19:10 PM


So, why did Cyprus decide on the depositor haircut? Because the banks had liquidity problems? or because the banks were insolvent, and if the latter then why were the banks insolvent?

Also in the event of a depositor haircut as in Cyprus, is this across all personal accounts or same for business?
Because a lot of larger accounts were held by Russians and it is always a good idea to screw foreigners rather than the own constituents.
Title: Re: EGFEY - Eurobank
Post by: Vizi1 on July 19, 2015, 07:02:11 PM
Fairfax mentioned in this WSJ article with respect to its Greek Bank Investment

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435 (http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435)
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 19, 2015, 08:17:44 PM
Fairfax mentioned in this WSJ article with respect to its Greek Bank Investment

http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435 (http://www.wsj.com/articles/investors-in-greek-banks-face-wipeout-on-recapitalization-1437047435)

A lot of people don't understand bank investment. One of the major risk is a regulator's push for capital increase, which will usually wipe out existing shareholders. I've seen this many many times in US and EU ever since I started learning bank investing from PlanMaestro back in 2009.
Regarding the current health of these greek banks, it is really hard to say how much damage has the 3 week bank shutdown done to these bank's balance sheet. Maybe nothing. Maybe a lot. But investors don't have a saying here. If the regulator thinks a capital increase is needed, then existing shareholder will be wiped out, no matter what the truth is.

I've been watching Greek banks and waiting since Prem bought. I felt lucky that I never bought one share. I was waiting for the GDP growth to recover and it did happen earlier this year, but the stock was trading at 90% book. Too high for me. Then things got worse and worse and the stock went down to 25% of book. Had the stock been trading at 25% of book in January this year, I might have built a large position and become a sucker.

Had the clowns in Syriza done the bailout deal in January, Greece would have been in a much better shape than what it is now. Too bad for the Greek people who elected these clowns.
Title: Re: EGFEY - Eurobank
Post by: SharperDingaan on July 19, 2015, 09:07:41 PM
You may want to dig a little deeper into what capital controls actually mean.

Current foreign currency denominated exports (tourism, goods, services, migrant labour earnings repatriation) less than/equal to foreign currency imports (oil, gas, food, service and manufacturing components). Encourage tourism, promote youth working abroad, dump product for FX earnings, domestic versus foreign suppliers will all help. But they really need some subsidization – discount energy, drugs, & somebody else to pay the cash cost of their NATO security commitments. 

Capital outflows on foreign sourced debt maturity + interest greater/equal than domestic sourced debt issuance and internal foreign currency investment (assume everything is Euros). Lots of possibilities here ranging from debt defeasement via direct subsidy, direct debt forgiveness, extending term, recapitalizing Greek banks with a transfer of ECB owned Greek bonds, and growing their way out. The more they can reduce the net annual drain of capital to creditors outside of Greece, the quicker they can come out from under their capital controls.

We think that a recap via a transfer of the ECB Greek bond holding (& then continuously rolling them) has to be very high on the list.

We also think that having one euro member under capital controls, when the rest are not; is not politically sustainable for any protracted period. You cannot claim to be a free trade zone within the euro umbrella – and then not practice it so publicly.

It really means a priority upgrade to Euro 2.0, and the pending retirement of dumber.

SD
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 20, 2015, 10:23:32 AM
I guess what is confusing me is that the ECB will not provide ELA if the recipient institutions are insolvent. I'm sure the ECB is aware of the solvency position of the greek banks. If they were insolvent, ELA would have have been cut off, correct? Also, it appears that the Bank Recovery and Resolution Directive (BRRD) is utilized only after a determination that an institution is insolvent and cannot be recapitalized via private methods. If the greek banks are solvent, would BRRD still be utilized? This would not make sense in light of its mandate.

I know that a review of the banks solvency will follow the signing of the 3 yr. deal, which at the moment, looks likely to be agreed upon prior to August ECB loan maturities. Perhaps we won't know until then which banks are considered insolvent or how they will be recapitalized. I do find it interesting that Wilbur Ross, who has to know about EFGEY's solvency, believes EGFEY is solvent. I heard him state that in an interview a few days ago when asked whether EGFEY would be taken over or combined with another bank. BRRD did not come up in the interview. 

Obviously time will tell. Meantime, I would expect investor sentiment to be quite negative with everyone guessing that shareholders will be wiped out. Maybe they will be. At the same time, I believe many of these same people were also predicting Grexit a short time ago. Will be interesting to see if Wilbur or Prem get wiped out. Anyone recall either one be handed a goose egg recently? 
Title: Re: EGFEY - Eurobank
Post by: muscleman on July 20, 2015, 10:40:22 AM
I guess what is confusing me is that the ECB will not provide ELA if the recipient institutions are insolvent. I'm sure the ECB is aware of the solvency position of the greek banks. If they were insolvent, ELA would have have been cut off, correct? Also, it appears that the Bank Recovery and Resolution Directive (BRRD) is utilized only after a determination that an institution is insolvent and cannot be recapitalized via private methods. If the greek banks are solvent, would BRRD still be utilized? This would not make sense in light of its mandate.

I know that a review of the banks solvency will follow the signing of the 3 yr. deal, which at the moment, looks likely to be agreed upon prior to August ECB loan maturities. Perhaps we won't know until then which banks are considered insolvent or how they will be recapitalized. I do find it interesting that Wilbur Ross, who has to know about EFGEY's solvency, believes EGFEY is solvent. I heard him state that in an interview a few days ago when asked whether EGFEY would be taken over or combined with another bank. BRRD did not come up in the interview. 

Obviously time will tell. Meantime, I would expect investor sentiment to be quite negative with everyone guessing that shareholders will be wiped out. Maybe they will be. At the same time, I believe many of these same people were also predicting Grexit a short time ago. Will be interesting to see if Wilbur or Prem get wiped out. Anyone recall either one be handed a goose egg recently?


Can you please show me the link to the Wilbur Ross interview about Eurobank's solvency?

"Anyone recall either one be handed a goose egg recently?" What does this mean?
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 20, 2015, 10:55:16 AM
I'll try to find a link to the interview with Wilbur Ross. He was a guest on CNBC World. It was on real late at night since I live in US. Believe the program was Worldwide Exchange or Squawk Box Europe. Carolin Roth was asking him about the news article that had come out saying that the Greek banks will be nationalized or taken over by other greek banks. This was shortly before the most recent article on Bank Recover and Resolution Directive, which has everybody talking about shareholder wipeouts and bail-ins. Wilbur made the point that EGFEY was not insolvent, but had a liquidity problem due to bank run. While his opinion can obviously change, the interview was a few days ago. I was just thinking to myself that he did not appear concerned about getting wiped out. But if I had a $50 million investment that could be wiped out, I think I would be somewhat concerned, even if it represented a small amount of my portfolio.

Goose egg just means "zero" or total loss.

For sake of information, here are some criteria for BRRD:

What are the objectives of resolution and the conditions to trigger it?

The main aims of a bank resolution are to: 1) safeguard the continuity of essential banking operations, 2) protect depositors, client assets and public funds, 3) minimise risks to financial stability, and 4) avoid the unnecessary destruction of value.

The authorities may determine that a bank needs to be resolved if:

    it has reached a point of distress such that there are no realistic prospects of recovery over an appropriate timeframe,

    all other private sector or supervisory intervention measures have been proved insufficient to restore the bank to viability, and

    winding up the institution under normal insolvency proceedings would risk prolonged uncertainty or financial instability and therefore resolving the bank would be better from a public interest perspective.

Entry into resolution will thus always occur at a point close to or at insolvency. Authorities nonetheless will retain a degree of discretion to ensure that they can intervene before it is too late for resolution to meet its objectives.   
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 22, 2015, 01:59:38 PM
Here is a video from yesterday with Wilbur Ross on Fox Business: http://www.msn.com/en-us/money/video/wilbur-ross-greece-will-stick-to-its-austerity-plan/vp-AAdiT9g

Again, he never mentions the possibility that his investment will be wiped out. He does mention being in Greece the past couple of days.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on July 23, 2015, 09:22:01 AM
It appears that the Bank Recovery and Resolution Directive's provisions regarding bail-ins does not become effective until January 1, 2016. Euclid Tsakalotos mentioned in a speech yesterday in Parliament that the banks will be recapitalized prior to January 1, 2016, perhaps sidestepping the bail-in provisions.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on July 23, 2015, 09:50:58 AM
Here is a video from yesterday with Wilbur Ross on Fox Business: http://www.msn.com/en-us/money/video/wilbur-ross-greece-will-stick-to-its-austerity-plan/vp-AAdiT9g

Again, he never mentions the possibility that his investment will be wiped out. He does mention being in Greece the past couple of days.

He also mentions that he would be a buyer at 6 cents - not something that someone who just lost a ton of money would likely say about the same investment at the same price that it has traded at in the past 6 months. I certainly see the possibility of a shareholder wipeout at this point; however, I'm not sure how likely it is.

All that is necessary to return to the situation that pervaded prior to February/March is for consumers to regain confidence in the banks to return deposits. This isn't so much of a capitalization issue given that they have already been recapped once AND there are already provisions in place for converting the DTAs into cash so it's more of a liquidity issue. That could be in part solved by dilution via the forfeit for DTAs for upfront cash OR the Greek government can move slowly over the next 3-6 months to rebuild confidence in the banks to return deposits.

That being said, the economy has been thrown into a tailspin and I don't think we'll being seeing a positive trend in defaults/earnings for a few quarters.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 01, 2015, 08:01:37 PM
The Greek exchange opens on Monday. Going to be very interesting to see what happens here.
Title: Re: EGFEY - Eurobank
Post by: randomep on August 02, 2015, 09:23:31 PM

I'll be staying up till 12:30am (PST) to see the market open.

I'll buy if they get cheap enough..... my investments are non-banking though
Title: Re: EGFEY - Eurobank
Post by: meiroy on August 02, 2015, 10:34:02 PM
You may want to dig a little deeper into what capital controls actually mean.

Current foreign currency denominated exports (tourism, goods, services, migrant labour earnings repatriation) less than/equal to foreign currency imports (oil, gas, food, service and manufacturing components). Encourage tourism, promote youth working abroad, dump product for FX earnings, domestic versus foreign suppliers will all help. But they really need some subsidization – discount energy, drugs, & somebody else to pay the cash cost of their NATO security commitments. 

Capital outflows on foreign sourced debt maturity + interest greater/equal than domestic sourced debt issuance and internal foreign currency investment (assume everything is Euros). Lots of possibilities here ranging from debt defeasement via direct subsidy, direct debt forgiveness, extending term, recapitalizing Greek banks with a transfer of ECB owned Greek bonds, and growing their way out. The more they can reduce the net annual drain of capital to creditors outside of Greece, the quicker they can come out from under their capital controls.

We think that a recap via a transfer of the ECB Greek bond holding (& then continuously rolling them) has to be very high on the list.

We also think that having one euro member under capital controls, when the rest are not; is not politically sustainable for any protracted period. You cannot claim to be a free trade zone within the euro umbrella – and then not practice it so publicly.

It really means a priority upgrade to Euro 2.0, and the pending retirement of dumber.

SD

Why do you give higher probability for Germany's proactive adjustment, than for Germany delaying the inevitable thus causing the final breakup of the Eurozone? So far there have been no signs they are willing to adjust, the German elite/bankers have too much depending on the cheap Euro and current local structure in Germany. Even if current politicians leave, another possibility is that more extreme politicians rise in their place (or extreme political parties) and then it goes even quicker to a breakup (where upon Germany goes through a brutal adjustment anyhow.. but hey, what can you do, people are people).
Title: Re: EGFEY - Eurobank
Post by: Sunrider on August 03, 2015, 01:15:52 AM
What are you buying and with which broker?
Thanks - C.


I'll be staying up till 12:30am (PST) to see the market open.

I'll buy if they get cheap enough..... my investments are non-banking though
Title: Re: EGFEY - Eurobank
Post by: tombgrt on August 03, 2015, 01:56:14 AM
It seems impossible to buy more Intralot through the German listing. :(

edit: No wonder, the stock is recovering from the lows under €1.30 to €1.45-1.50 and I was watching delayed information. Too bad!
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 03, 2015, 07:30:30 AM
I've had a limit order out at 0.035 USD that hasn't been filled yet. The OTC listing has traded up as high as $0.08....I certainly wasn't expecting it to trade up today :/
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 03, 2015, 09:37:22 AM
The swing in value today is insane!!!! U.S. shares have trades as low as $0.04 and as high as $0.10 just today. The bid-ask was $0.03/$0.07 when I last checked on Scottrade. Insane!

IB won't trade it to accumulate more shares though and Scottrade limit orders have always been extremely hit and miss (but mostly miss) for me, so I don't think I'll get to benefit from the action, but holy cow!
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on August 03, 2015, 10:56:40 AM
Ya, was surprised to see it trade up and down so much today. Really strange stuff.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 06, 2015, 06:48:31 AM
According to Google Finance, 10k shares trades yesterday at $0.38. Look like someone didn't use a limit order or forgot a zero after the decimal....
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 06, 2015, 03:42:26 PM
I bet traders are having a field day with this. Traded between 0.04 and 0.05 all day today. Scoop it up and 0.04 and limit-sell at 0.05. Rinse and repeat. I'd be doing that myself with a portion of my position if my work didn't have a 30-day minimum between opposing trades in the same CUSIP.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on August 09, 2015, 10:47:40 AM
More recent commentary from Wilbur Ross.

http://money.cnn.com/video/news/2015/08/06/greece-banks-wilbur-ross.cnnmoney/

Wilbur is concerned with whether the asset quality review will be fair given the recent tumult and liquidity events.

May be prepared to participate in a rights offering.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on August 12, 2015, 09:42:47 AM
http://finance.yahoo.com/news/exclusive-greek-bank-bailout-funds-depend-business-plan-112736777--sector.html

Restricted access to funds until recapitalization following stress tests. Recapitalization to occur prior to 2016 to avoid bail-in. Existing shareholders will be diluted, but may participate in recapitalization.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 19, 2015, 07:33:01 AM
ELA was reduced today as liquidity has improved. Eurobank has traded down to $0.02. I understand that there is likely to be dilution - but how much? Wilbur Ross was confident that the banks were well reserved and that is just a liquidity issue from the pulled deposits. There is already a mechanism in place to convert the DTAs into cash in exchange for a dilutive issuance of warrants if needed, so is another massive share sale really necessary if deposits are returning as the ELA reduction suggests?

Would the recapitalization take place at higher prices than the current market price recognizing that any players who want a large position would necessarily drive the current price up or is it likely to undercut the current price in an attempt to get enough supporters to raise necessary funds?

Title: Re: EGFEY - Eurobank
Post by: muscleman on August 19, 2015, 08:20:16 AM
Please let me know if you see any additional Wilbur Ross interviews. I found Google to be not very helpful in searching for his latest interviews.  :)
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 21, 2015, 08:22:55 AM
https://www.washingtonpost.com/world/europe/greek-premier-resigns-calls-snap-elections-to-shore-up-support/2015/08/20/c6f5398e-4752-11e5-9f53-d1e3ddfd0cda_story.html

What the fuck is going on?
This guy implemented the unpopular bailout deal and resigned right away?  :o What is this clown thinking about? Or maybe I am too simple and naive that I can't understand his strategic moves?
Title: Re: EGFEY - Eurobank
Post by: gary17 on August 21, 2015, 08:38:48 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy. 
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 21, 2015, 09:06:32 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy.

Yea - I'm quite confused by the whole thing. It seemed like Greece had all of the leverage, a national vote, and the IMF saying no to bailout arrangement without necessary debt relief. He won a ton of concessions, but then kept pushing until he eventually folded and gave the Greeks a way worse deal than what was originally on the table. Now he resigns.

I would be surprised if the Greeks re-elect him with the about-face he took in the negotiations. I'm just floored and confused by this whole thing. I've got limit orders out for more shares of EGFEY just because if this ever unwinds in a semi-positive way, then there's no reason it should be trading in the $0.02 range. After averaging down at $0.06, $0.04, and hopefully at $0.02 I'll be done building a 2-3% position in the name and will just hold and wait for whatever outcome results from the recapitalization that is coming.

Title: Re: EGFEY - Eurobank
Post by: MrB on August 21, 2015, 10:40:46 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy.

Yea - I'm quite confused by the whole thing. It seemed like Greece had all of the leverage, a national vote, and the IMF saying no to bailout arrangement without necessary debt relief. He won a ton of concessions, but then kept pushing until he eventually folded and gave the Greeks a way worse deal than what was originally on the table. Now he resigns.

I would be surprised if the Greeks re-elect him with the about-face he took in the negotiations. I'm just floored and confused by this whole thing. I've got limit orders out for more shares of EGFEY just because if this ever unwinds in a semi-positive way, then there's no reason it should be trading in the $0.02 range. After averaging down at $0.06, $0.04, and hopefully at $0.02 I'll be done building a 2-3% position in the name and will just hold and wait for whatever outcome results from the recapitalization that is coming.

Greece can always be trusted to do the worst thing, once all good opportunities have been squandered.
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 21, 2015, 10:54:56 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy.

Yea - I'm quite confused by the whole thing. It seemed like Greece had all of the leverage, a national vote, and the IMF saying no to bailout arrangement without necessary debt relief. He won a ton of concessions, but then kept pushing until he eventually folded and gave the Greeks a way worse deal than what was originally on the table. Now he resigns.

I would be surprised if the Greeks re-elect him with the about-face he took in the negotiations. I'm just floored and confused by this whole thing. I've got limit orders out for more shares of EGFEY just because if this ever unwinds in a semi-positive way, then there's no reason it should be trading in the $0.02 range. After averaging down at $0.06, $0.04, and hopefully at $0.02 I'll be done building a 2-3% position in the name and will just hold and wait for whatever outcome results from the recapitalization that is coming.

I would be cautious to buy any bank shares right now. We know capital increase is coming, and the further the current share price drops, the more damage the capital increase will do to current shareholders, and the more the share price will drop in expectation of a massive dilution. Therefore it is a self fulfilling prophecy at this moment.

Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 21, 2015, 11:13:58 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy.

Yea - I'm quite confused by the whole thing. It seemed like Greece had all of the leverage, a national vote, and the IMF saying no to bailout arrangement without necessary debt relief. He won a ton of concessions, but then kept pushing until he eventually folded and gave the Greeks a way worse deal than what was originally on the table. Now he resigns.

I would be surprised if the Greeks re-elect him with the about-face he took in the negotiations. I'm just floored and confused by this whole thing. I've got limit orders out for more shares of EGFEY just because if this ever unwinds in a semi-positive way, then there's no reason it should be trading in the $0.02 range. After averaging down at $0.06, $0.04, and hopefully at $0.02 I'll be done building a 2-3% position in the name and will just hold and wait for whatever outcome results from the recapitalization that is coming.

I would be cautious to buy any bank shares right now. We know capital increase is coming, and the further the current share price drops, the more damage the capital increase will do to current shareholders, and the more the share price will drop in expectation of a massive dilution. Therefore it is a self fulfilling prophecy at this moment.

You might be right. There's no way for me to know. The stock is so illiquid it's difficult for any sizeable investor to get a toe hold without significantly moving the market. There is the possibility that whatever recap comes is actually at a premium to the current value as a recognition of that fact and the panic selling that seems to be happening. There's nothing that says the recap price has to be based off of recent trading activity. Anyways, the price could easily recover to $0.04-$0.06 in that period of time at which case you kick yourself for not picking it up at $0.02.

I think $0.02 is ridiculous and am comfortable with the uncertainty surrounding the recap.
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 24, 2015, 09:07:03 AM
I think he probably made enemies going through with the deal. So you call an election hoping the nation is on your side.

The election would kick the opposition out of office. 

Normal strategy is a parliamentary democracy.

Yea - I'm quite confused by the whole thing. It seemed like Greece had all of the leverage, a national vote, and the IMF saying no to bailout arrangement without necessary debt relief. He won a ton of concessions, but then kept pushing until he eventually folded and gave the Greeks a way worse deal than what was originally on the table. Now he resigns.

I would be surprised if the Greeks re-elect him with the about-face he took in the negotiations. I'm just floored and confused by this whole thing. I've got limit orders out for more shares of EGFEY just because if this ever unwinds in a semi-positive way, then there's no reason it should be trading in the $0.02 range. After averaging down at $0.06, $0.04, and hopefully at $0.02 I'll be done building a 2-3% position in the name and will just hold and wait for whatever outcome results from the recapitalization that is coming.

I would be cautious to buy any bank shares right now. We know capital increase is coming, and the further the current share price drops, the more damage the capital increase will do to current shareholders, and the more the share price will drop in expectation of a massive dilution. Therefore it is a self fulfilling prophecy at this moment.

You might be right. There's no way for me to know. The stock is so illiquid it's difficult for any sizeable investor to get a toe hold without significantly moving the market. There is the possibility that whatever recap comes is actually at a premium to the current value as a recognition of that fact and the panic selling that seems to be happening. There's nothing that says the recap price has to be based off of recent trading activity. Anyways, the price could easily recover to $0.04-$0.06 in that period of time at which case you kick yourself for not picking it up at $0.02.

I think $0.02 is ridiculous and am comfortable with the uncertainty surrounding the recap.

Well, of course there is nothing that says the recap price has to be based on the recent price. But from what I observed in the numerous in the past few years of US and EU banking recap, the price is most likely a discount to the current market price, in order to attract enough investors.

Whether 0.02 is ridiculously cheap or not is entirely based on how much additional capital must be injected and how much dilution will happen. Therefore it is a pure gambling than an educated bet for me. Maybe you have some edge on this.



Title: Re: EGFEY - Eurobank
Post by: Og on August 24, 2015, 11:28:04 AM
What's the intelligent rational for buying at 2 cents. What if it's worth 1 cent or a half penny? How is one to know. This is out of my circle of competence and am curious if someone has a real handle on this they could help me come up with some intrinsic value for this.
Title: Re: EGFEY - Eurobank
Post by: muscleman on August 24, 2015, 09:51:04 PM
What's the intelligent rational for buying at 2 cents. What if it's worth 1 cent or a half penny? How is one to know. This is out of my circle of competence and am curious if someone has a real handle on this they could help me come up with some intrinsic value for this.

How much is it worth depends on the extent of dilution. The lower the price, the more severe the dilution. Therefore the current price would go even lower in expectation of a massive dilution.
This is a self-fulfilling prophecy and therefore there is a big uncertainty element in the formula of predicting the bottom of the price.
Title: Re: EGFEY - Eurobank
Post by: Og on August 25, 2015, 09:35:40 PM
Interesting, thanks!
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on August 26, 2015, 07:22:59 AM
http://www.valuewalk.com/2015/08/wilbur-ross-correction-is-in-the-sixth-inning/ (http://www.valuewalk.com/2015/08/wilbur-ross-correction-is-in-the-sixth-inning/)

Brief comment by Wilbur Ross at the end of the clip. Not much new.
Title: Re: EGFEY - Eurobank
Post by: MrB on September 15, 2015, 05:00:32 AM
Wilbur again
http://www.bloomberg.com/news/articles/2015-09-14/ecb-is-off-the-charts-in-greek-bank-review-wilbur-ross-says
http://www.ft.com/cms/s/0/e557686c-5afc-11e5-a28b-50226830d644.html#axzz3lo951T2F
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on September 15, 2015, 02:12:17 PM
Wilbur again
http://www.bloomberg.com/news/articles/2015-09-14/ecb-is-off-the-charts-in-greek-bank-review-wilbur-ross-says
http://www.ft.com/cms/s/0/e557686c-5afc-11e5-a28b-50226830d644.html#axzz3lo951T2F

I kind of agree with him. Historically, he as a very strong point that a recapitalization is probably not necessary, the worst case scenario won't happen, and that having a committed backstop without forcing a massive capital raise will probably work out better given the hindsight we've had on other banks.

That being said, Europe has done everything in it's power to penalize the Greeks regardless of the efficacy of the policies and I'm not certain that they'll be any different here. Certainly still interested at buying more at the right price, but have been extremely picky with my entry points and holding dry powder to participate after the recap depending on the situation.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on September 15, 2015, 05:25:06 PM
I wonder what Prem has to say?
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on September 17, 2015, 08:44:20 AM
https://uk.news.yahoo.com/greek-bank-recapitalisation-must-not-alienate-investors-eurobank-122906884--sector.html#eFiLbN6
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on September 20, 2015, 07:13:58 PM
Quote
http://www.bloomberg.com/news/articles/2015-09-20/syriza-is-headed-for-victory-in-greek-election-exit-poll-shows

Can't imagine this being good for the recapitalization efforts as I imagine that European politicians probably don't like the guy.

Surprised to see him win given the absolute failure in negotiations in the 180 degree about face AFTER the greek people said they wanted didn't support the creditors' plans.
Title: Re: EGFEY - Eurobank
Post by: walt373 on September 26, 2015, 12:42:05 PM
I'm not clear on what the upside is. Doesn't a recap all but guarantee a lower price? I think expecting a recap at a price close to or even above market price is overly optimistic at this point. It's not like investors are itching to get into Greek banks but just can't because of liquidity, probably just the opposite. It's going to be tough to attract investors so a big discount will be necessary.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on October 20, 2015, 06:21:10 AM
http://www.reuters.com/article/2015/10/20/eurozone-greece-banks-idUSA8N11H02B20151020?feedType=RSS&feedName=governmentFilingsNews (http://www.reuters.com/article/2015/10/20/eurozone-greece-banks-idUSA8N11H02B20151020?feedType=RSS&feedName=governmentFilingsNews)

Recap seen at less than EUR 20B for nation's banks.
Title: Re: EGFEY - Eurobank
Post by: MrB on October 27, 2015, 07:30:47 AM
Oct presentation
http://www.eurobank.gr/Uploads/pdf/Eurobank_Presentation_October2015.pdf
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on October 31, 2015, 08:56:34 AM
http://www.reuters.com/article/2015/10/31/greece-eurobank-ceo-idUSA8N12U00120151031
Title: Re: EGFEY - Eurobank
Post by: constructive on November 01, 2015, 07:43:47 AM
The banks only have 5 days to create their plans to raise equity. We'll see if Watsa and Ross are willing to put up even more money. I expect the majority will have to come from government bail-out, not shareholder bail-in.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 04, 2015, 06:16:56 AM
http://www.valuewalk.com/2015/11/wilbur-ross-on-u-s-foreign-economies-and-2016-politics/ (http://www.valuewalk.com/2015/11/wilbur-ross-on-u-s-foreign-economies-and-2016-politics/)

Wilbur Ross on Eurobank. Around 3 min mark.

Seems optimistic about Eurobanks future, mentions it was the best bank in the recent stress tests, will be subscribing to the capital raise, and that the dilution will likely happen at the expense of the government's stake and not private shareholders.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 04, 2015, 06:43:27 AM
Nov presentation
http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015.pdf
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 04, 2015, 10:10:07 AM
Nov presentation
http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015.pdf

Thanks for posting. Anybody seen any word on the pricing of the EUR 2 billion issuance? Evidently, it will only be available to institutional investors so current investors will have to increase their stake on the open market to mimic participation. Just curious what the pricing will look like to know if the current shares are good value.
Title: Re: EGFEY - Eurobank
Post by: constructive on November 05, 2015, 03:54:36 AM
the dilution will likely happen at the expense of the government's stake and not private shareholders.

Not quite accurate. All existing shareholders will be diluted equally. Ross is predicting that private shareholders will take up over 65% of the new shares, so the proportion of private shares will increase.

This investment depends on the macro situation in Greece over the next 2 years coming in much better than the stress test. And Europe is known for having lax stress test assumptions compared to the US.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 05, 2015, 05:52:37 AM
Nov presentation
http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015.pdf

Thanks for posting. Anybody seen any word on the pricing of the EUR 2 billion issuance? Evidently, it will only be available to institutional investors so current investors will have to increase their stake on the open market to mimic participation. Just curious what the pricing will look like to know if the current shares are good value.
Was asked that on the call and essentially said we will know next week, when they start with book building.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 16, 2015, 09:36:25 AM
Nov presentation
http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015.pdf

Thanks for posting. Anybody seen any word on the pricing of the EUR 2 billion issuance? Evidently, it will only be available to institutional investors so current investors will have to increase their stake on the open market to mimic participation. Just curious what the pricing will look like to know if the current shares are good value.
Was asked that on the call and essentially said we will know next week, when they start with book building.

Updated presentation is now available: http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf (http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf)
New press release too: http://www.eurobank.gr/uploads/pdf/Press_16112015_GR.pdf (http://www.eurobank.gr/uploads/pdf/Press_16112015_GR.pdf) <- Lowers the offering amount by about 4%.

About 22% of the offering is spoken for by Fairfax, WL Ross, Highfields, and Brookfield. They have the right to increase their allocations by an additional 6% meaning total could be closer to 28-29% of the total offering. The board of directors will also be contributing EUR 80mm which is an additional 4%.

A sizable ownership by the government/bailout fund could be back in the cards.
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on November 17, 2015, 07:55:58 AM
http://www.bloomberg.com/news/articles/2015-11-17/eurobank-alpha-plug-capital-holes-as-greece-gets-bailout-deal
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 18, 2015, 07:53:55 AM
So I'm having trouble understanding the results of the shareholder meeting:

I see the following:
Capital to be raised: EUR 2,038,920,000
EUR 1,338,000,000 will be in the form of convertible bonds.
The remaining EUR 700 million will be split between equity and Contingent Convertible bonds.

What I'm confused about is the following:
Quote
1. Reduce rising to € 4.412.362.962,60 the Bank's common share capital € 4.368.239.333,10 (with corresponding amendment of Articles 5 and 6 of the Statute of the Bank)by simultaneously
(i) increase of the nominal value of the ordinary registered share of the Bank and reducing the total number of common shares through link together with proportion cent (100) existing shares to one (1) new common registered shares (reverse split), and
(ii) reduction of new nominal value of the ordinary registered share (derived from the reverse split) to € 0,30, with order to absorb losses carried forward by the formation of a reserve equivalent to offsetting according to Article 4 para. 4a of CL 2190/1920. Furthermore, authorization was given to the Board for the liquidation of the Bank of the common shares that formed by the aggregation of fractional shares that may result from the above increase and decrease, and the performance of the proceeds to the beneficiaries and to perform any relevant or necessary adequate action

Obviously this is announcing the 100-to-1 split, but what does it mean to reduce the nominal value of the share capital to € 0,30? Does that mean there will be a 100-to-1 split, but you lose 70% of the value of your current share ownership in the process?

Also, the pricing for the deal wasn't announced, but they did say:
Quote
The issue price of new shares be determined by book building process (bookbuilding) and will not be less than the par value of its ordinary shares Bank after the completion of the above reduction of the share capital (ie € 0,30 per New Share)

So, after the 100 to 1 split, they minimum price of the offer will be EUR 0.30 (or EUR 0.03 for current shares). This is 50% above the current price and is certainly not anywhere nearly as bad as some thought in the potential for using the prior average trading price.

Obviously, i need understanding the nominal reduction in share value to fully understand what's going on here, but the pricing and total amount of issuance don't seem anywhere near as bad as the worst case scenario I envisioned.
Title: Re: EGFEY - Eurobank
Post by: morningstar on November 18, 2015, 08:04:40 AM
So, after the 100 to 1 split, they minimum price of the offer will be EUR 0.30 (or EUR 0.03 for current shares). This is 50% above the current price and is certainly not anywhere nearly as bad as some thought in the potential for using the prior average trading price.

Obviously, i need understanding the nominal reduction in share value to fully understand what's going on here, but the pricing and total amount of issuance don't seem anywhere near as bad as the worst case scenario I envisioned.

EUR 0.003 for current shares. That's probably closer to where the book building is likely to price.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 18, 2015, 08:06:20 AM
So, after the 100 to 1 split, they minimum price of the offer will be EUR 0.30 (or EUR 0.03 for current shares). This is 50% above the current price and is certainly not anywhere nearly as bad as some thought in the potential for using the prior average trading price.

Obviously, i need understanding the nominal reduction in share value to fully understand what's going on here, but the pricing and total amount of issuance don't seem anywhere near as bad as the worst case scenario I envisioned.

EUR 0.003 for current shares. That's probably closer to where the book building is likely to price.

Yes...I see. My mistake on the math. Far worse than I expected then...

Just did some searching and found out what the nominal value means too. It's not a 70% reduction in value as the nominal price is totally meaningless relative to the trading price. It's just the floor price in which the company can list equity - so basically it's a hint at where the offering will likely price in calculating the dilution of the EUR 700mm offering.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 18, 2015, 08:16:14 AM
So, after the 100 to 1 split, they minimum price of the offer will be EUR 0.30 (or EUR 0.03 for current shares). This is 50% above the current price and is certainly not anywhere nearly as bad as some thought in the potential for using the prior average trading price.

Obviously, i need understanding the nominal reduction in share value to fully understand what's going on here, but the pricing and total amount of issuance don't seem anywhere near as bad as the worst case scenario I envisioned.

EUR 0.003 for current shares. That's probably closer to where the book building is likely to price.

Yes...I see. My mistake on the math. Far worse than I expected then...

Just did some searching and found out what the nominal value means too. It's not a 70% reduction in value as the nominal price is totally meaningless relative to the trading price. It's just the floor price in which the company can list equity - so basically it's a hint at where the offering will likely price in calculating the dilution of the EUR 700mm offering.
0.30 is the legal minimum price at which you can issue shares.
See slide 5 of the Piraeus cap raise presentation to get an idea of the maths of the process.
Title: Re: EGFEY - Eurobank
Post by: rijk on November 18, 2015, 10:06:57 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us
Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on November 18, 2015, 01:50:50 PM
http://www.ekathimerini.com/203562/article/ekathimerini/business/eurobank-share-offering-at-just-001-eurosshare

Offering was at .01, or 1 euro per share following the reverse split.

Title: Re: EGFEY - Eurobank
Post by: Eye4Valu on November 18, 2015, 01:58:19 PM
Fairfax and others paid .31 euros per share in 2014 offering. Fairfax averaged down following that offering and prior to Tsipras holding the referendum. Now they purchase at .01 euros. What would you guess their cost basis is? What is always surprising is how optimistic Prem is on the situation. Wilbur Ross too. They are convinced this will work out longer term.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 18, 2015, 02:21:01 PM
Fairfax and others paid .31 euros per share in 2014 offering. Fairfax averaged down following that offering and prior to Tsipras holding the referendum. Now they purchase at .01 euros. What would you guess their cost basis is? What is always surprising is how optimistic Prem is on the situation. Wilbur Ross too. They are convinced this will work out longer term.

Yea - but they can't consider their sunk costs when evaluating the forward looking prospects. At the time they invested 0.31 looked attractive to them. During the political fallout, both obviously thought that the prices around 0.10-0.15 looked good. Now, at 0.01, it looks good going forward regardless of what happened in the past.

Unfortunately, this had nothing to do with the company and everything to do with the game of politics. The company was probably fine. The deposits may have come back on their own after stability sets in and the capital controls were lifted (look at banks like Sberbank and Santander for examples of how deposits find the safest banks). The capitalization was probably sound. But the eurozone will not tolerate even the slightest chance of another financial system bailout and wanted to teach Greece a lesson...this is the end result.

My cost basis is was probably around EUR 0.07 across all of my purchases which seemed like a steal relative to potential profitability, book value, etc. But of course, none of that matters if they dilute me at 0.01.....

Kudos to those who foresaw such a harsh pricing environment. I would've though cooler heads would have prevailed but it looks like I was wrong on this one.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 18, 2015, 02:30:59 PM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 19, 2015, 03:00:51 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??
Title: Re: EGFEY - Eurobank
Post by: MrB on November 19, 2015, 04:49:21 AM
Interestingly Alphabank issues new shares at 8% of current NAV/share (4/53) and Eurobank at half of that 4% (1/24)
Title: Re: EGFEY - Eurobank
Post by: rijk on November 19, 2015, 06:11:21 AM
with (pre reverse split) 200 billion new shares diluting 15 billion existing shares, can we count on market forces driving the current price much lower towards €0.01/share, resulting in p/tbv of 40%?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 19, 2015, 06:35:39 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 19, 2015, 07:21:12 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.

Check the links below for context, but the first release says,

"As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued."

http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf
http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf

Looks like 2Bn to me.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 19, 2015, 07:23:52 AM
with (pre reverse split) 200 billion new shares diluting 15 billion existing shares, can we count on market forces driving the current price much lower towards €0.01/share, resulting in p/tbv of 40%?

I don't know, but it is now recapitalized so on that basis it is unlikely. Having said that there should be selling pressure from FI guys.
Title: Re: EGFEY - Eurobank
Post by: rijk on November 19, 2015, 07:52:41 AM
at some point in the next few days/weeks, the price of the new 2 billion shares and the old 0.15 billion shares will merge

will the price of the new shares rise 70% in a few days or will the price of the existing shares drop?
Title: Re: EGFEY - Eurobank
Post by: muscleman on November 19, 2015, 08:00:02 AM
What's the strike price for the CO bond? Are they trading in Athens exchange as well?
Title: Re: EGFEY - Eurobank
Post by: MrB on November 19, 2015, 09:24:55 AM
at some point in the next few days/weeks, the price of the new 2 billion shares and the old 0.15 billion shares will merge

will the price of the new shares rise 70% in a few days or will the price of the existing shares drop?

It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable.

Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 19, 2015, 02:26:03 PM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.

Check the links below for context, but the first release says,

"As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued."

http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf
http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf

Looks like 2Bn to me.

You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals.

It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!?

Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money.
Title: Re: EGFEY - Eurobank
Post by: constructive on November 19, 2015, 02:59:41 PM
I wonder why they changed the plan. Was there a lack of demand for the converts, or did the government veto it for not raising enough straight equity?
Title: Re: EGFEY - Eurobank
Post by: rijk on November 20, 2015, 12:35:28 AM
It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable.

we will see in a few days, 2 billion new shares are not yet in the market, i would expect the price to converge somewhere between €0.01 and €0.016
there will be some selling from new investors that could potentially lock in 40-50-60% gains in a few days, and there are many of them.....
Title: Re: EGFEY - Eurobank
Post by: MrB on November 20, 2015, 12:47:24 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.

Check the links below for context, but the first release says,

"As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued."

http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf
http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf

Looks like 2Bn to me.

You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals.

It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!?

Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money.

I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option.

However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery.

I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!!

Issue price/TBV
Alpha Bank 8%
Eurobank 4%
NBG 2%
Piraeus ?? Not priced yet as far as I know.

Lastly, according to the NBG release your board of directors was supposed to look out for your interests.
"The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)"

Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed.

Somewhat related article, coming up with slightly different numbers
http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595
Title: Re: EGFEY - Eurobank
Post by: MrB on November 20, 2015, 05:01:28 AM
It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable.

we will see in a few days, 2 billion new shares are not yet in the market, i would expect the price to converge somewhere between €0.01 and €0.016
there will be some selling from new investors that could potentially lock in 40-50-60% gains in a few days, and there are many of them.....
Ok I think I missed your point. Remember that most of those that get new shares asked for them. Except for the fixed income guys that were "bailed in". Some of them, perhaps a good chunk, could be forced to sell e.g. bond fund that is not allowed to hold equity.

World Bank, EBRD, Fairfax consortium & other new shareholders make up 63% of new shares, which I guess include very few motivated sellers. "Old" shareholders make up 7% and LME 30%, where is where the motivated sellers will come from.

P.S. Old and new shares will not trade simultaneously; see timetable for details. 
Traded down to 1.5 today, but also up to 1.7
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 20, 2015, 06:31:47 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.

Check the links below for context, but the first release says,

"As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued."

http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf
http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf

Looks like 2Bn to me.

You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals.

It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!?

Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money.

I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option.

However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery.

I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!!

Issue price/TBV
Alpha Bank 8%
Eurobank 4%
NBG 2%
Piraeus ?? Not priced yet as far as I know.

Lastly, according to the NBG release your board of directors was supposed to look out for your interests.
"The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)"

Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed.

Somewhat related article, coming up with slightly different numbers
http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595

I don't blame Fairfax. It's their responsibility to look out for themselves and their shareholders and they did that.

I blame Eurobank management. They're the ones beholden to the current shareholders. It was their management who decided to issue 100% equity as a massive discount despite the likely availability of cheaper financing alternatives. It was their management who decided to not make it available via a rights offering so retail investors could participate. It was their management that put out the misleading material suggesting that EUR 1.3B in convertible preferred shares was an intended cornerstone of the offering. It's just frustrating to see your "average shareholders" who stuck with you through all this bullshit to be treated like that by the management.
Title: Re: EGFEY - Eurobank
Post by: MrB on November 20, 2015, 07:59:45 AM
eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated

and they will still go ahead and invest nearly another half a billion???

https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us

Quick one. What is 28% of EUR 5,644m? Very rough maths here.

Started trading today at around 0.016

So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total.

According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn.

TBV/share then from 0.24 to 0.258 on a pre split basis.

So on a pre split basis now trading 0.62x BV

As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value.


http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf


Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV.   

No??

They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though.

The numbers are bad, but not as bad as if they issued 2B shares.

Check the links below for context, but the first release says,

"As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued."

http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf
http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf

Looks like 2Bn to me.

You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals.

It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!?

Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money.

I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option.

However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery.

I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!!

Issue price/TBV
Alpha Bank 8%
Eurobank 4%
NBG 2%
Piraeus ?? Not priced yet as far as I know.

Lastly, according to the NBG release your board of directors was supposed to look out for your interests.
"The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)"

Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed.

Somewhat related article, coming up with slightly different numbers
http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595

I don't blame Fairfax. It's their responsibility to look out for themselves and their shareholders and they did that.

I blame Eurobank management. They're the ones beholden to the current shareholders. It was their management who decided to issue 100% equity as a massive discount despite the likely availability of cheaper financing alternatives. It was their management who decided to not make it available via a rights offering so retail investors could participate. It was their management that put out the misleading material suggesting that EUR 1.3B in convertible preferred shares was an intended cornerstone of the offering. It's just frustrating to see your "average shareholders" who stuck with you through all this bullshit to be treated like that by the management.

Not management - board of directors (see bold above)

http://www.eurobank.gr/online/home/generic.aspx?id=1302&mid=1024&lang=en

Chairman Non Executive   Nikolaos V. Karamouzis   
Vice Chairman, Non-Executive Independent Director   Spyros L. Lorentziadis   
Chief Executive Officer   Fokion C. Karavias   
Deputy Chief Executive Officer   Stavros E. Ioannou   
Deputy Chief Executive Officer   Theodoros A. Kalantonis   

Non-Executive Directors   
Wade Sebastian R.E. Burton   
George K. Chryssikos   

Non-Executive Independent Directors   
Jon Steven B.G. Haick   
Bradley Paul L. Martin   
Stephen L. Johnson
   

Non-Executive Director (1)   
Christina G. Andreou   
      
Non-Executive Director (2)   
Kenneth Howard  Prince-Wright   
      
Secretary   
Harris V. Kokologiannis   
Title: Re: EGFEY - Eurobank
Post by: rijk on November 23, 2015, 12:51:37 PM
anybody understands how 3.5 billion billion shares of nbg can trade at $0.26/share today when next week another 75 billion shares will be added at $0.02/share?
Title: Re: EGFEY - Eurobank
Post by: rijk on November 24, 2015, 05:36:35 AM
after hours, the price dropped back to below 20 cents, so probably over 100 million shares traded yesterday, causing a 50% increase in price, based on the erroneous assumption that new shares would be issued at 30 cents when in fact they are issued at 2 cents????

still a long way down to be somewhat in sink with the new issue price....
Title: Re: EGFEY - Eurobank
Post by: rijk on December 02, 2015, 05:58:56 AM
recapitalized eurobank shares trading at €1.00 now, the equivalent of €0.01 pre recapitalization/reverse split

tbv €2.58/share (5,644/2,186), this should be around 40% tbv, not bad for a fully recapitalized/stress tested bank

http://www.helex.gr/stock-snapshot/-/select-stock/61
Title: Re: EGFEY - Eurobank
Post by: Menko on December 02, 2015, 06:35:16 AM
Thank you for all the nice analysis of the past weeks. I will add some thoughts as a thank you note.

I think the issue many felt got solved today by the market: the shares are priced now at a bit less than EUR 1, the price of the rights issue, i.e. less than the price paid by Prem Watsa and Wilbur Ross, so to say.

We originally bought our stake at on average 7.1 cents and today invested quite a bit more. The book value of the bank is now stated at circa 2.6 EUR per share, and the EUR 1 price is less than half of book value. There is a large DTA (deferred tax asset) of course and, adding my two cents, this is possibly something that can be of help: the loan provisions have risen to more than 11bn EUR. Total equity is now circa EUR 7bn (not only common equity yet all equity securities) and what if these provisions are not completely absorbed by actual future loan losses? Every EUR 100m not used will lead to quite a nice addition to total equity potentially and certainly to common equity. We can maybe look at Bank of America and Citigroup with regards to provision reduction examples since 2008/2009. Eurobank is possibly in a more difficult situation now. E/A is now close to 10% if we take the numbers of the bank at face value. We are willing to invest 5 to 7 years in this bank.

Having worked in Greece in 2009 for a bank as part of their global debt restructuring unit: this will take time, most likely. This is hard work and I thank the people working in the "Troubled Assets Group" of the bank. TAG Team? The restructuring work will be hard work, and not always fun as people, families, and companies are involved.
Every time a Eurobank TAG milestone is reached, or when waiting in the coming years, may I suggest, to bring some lightness: https://www.youtube.com/watch?v=ffCEr327W44

One last thought: if the bank could earn a 1% return on assets in the future, 1% of EUR 75bn in assets (I mean net profit here) divided by 2.19bn shares would lead to close to EUR 0,35 of net earnings per share. I think a P/E multiple of 9 to 11 would be sensible if the 1% is reached. That would lead to a potential value of circa EUR 3.5 per share. As said, book value now is circa 2.6 EUR per share. And additionally: the EUR 75bn in total assets do not include the more than 11bn in provisions. Maybe more than 11bn is needed, maybe less. 

We may buy more shares in the future, depending on the developments.

All the above is not investment advice, and solely for informational purposes. Please keep this in mind.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on December 02, 2015, 07:37:51 AM
Quick question:

Are the U.S. ADRs insanely overvalued at this point? Post the 100-for-1 split, the shares basically trade in Athens for right around EUR 1. The ADRs have not yet participated in the 100-for-1 split and trade in USD at 0.011 (or $1.10 post split).

Each ADR is representative of 1/2 of a share so it seems like the ADRs are nearly 100% overvalued relative to the actual shares.

The ADR should trade around $0.0053 pre-split or $0.53 post split. Am I missing something?
Title: Re: EGFEY - Eurobank
Post by: rijk on December 02, 2015, 08:20:30 AM
too bad that otc grey market shares can't be shorted, otherwise this would be the perfect arbitrage trade.....
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on December 07, 2015, 07:41:41 AM
Quick question:

Are the U.S. ADRs insanely overvalued at this point? Post the 100-for-1 split, the shares basically trade in Athens for right around EUR 1. The ADRs have not yet participated in the 100-for-1 split and trade in USD at 0.011 (or $1.10 post split).

Each ADR is representative of 1/2 of a share so it seems like the ADRs are nearly 100% overvalued relative to the actual shares.

The ADR should trade around $0.0053 pre-split or $0.53 post split. Am I missing something?


My ticker in my watch lists changed from EGFEY to EGFED. EGFED appears to be the post-split ADR, though I have no idea why they would change the ticker. After today's 22% drop, shares now trade for $0.56 post-split, or $0.0056 on a pre-split basis. I hope that my observation helped anyone get out of the ADRs. I was fortunate enough to be able to sell about 3/4 of my position for $0.01 and the remainder at $0.0079 so I'm feeling pretty good about it.

I'll probably be switching my exposure over to the Athens exchange for increased liquidity - was really sweating getting those orders filled once I realized my shares were at a 100% premium to where they should trade.
Title: Re: EGFEY - Eurobank
Post by: rijk on January 21, 2016, 03:06:47 AM
looks like the shareholder base was not that stable after all, price dropped to €0.67 or 26% tbv
Title: Re: EGFEY - Eurobank
Post by: rijk on February 04, 2016, 02:08:40 AM
eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv

http://www.morningstar.com/stocks/xfra/efgd/quote.html
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 04, 2016, 05:54:41 AM
eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv

http://www.morningstar.com/stocks/xfra/efgd/quote.html

All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00.

I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk...
Title: Re: EGFEY - Eurobank
Post by: MrB on February 04, 2016, 07:09:40 AM
eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv

http://www.morningstar.com/stocks/xfra/efgd/quote.html

All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00.

I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk...

Go big or go home  ;D
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 04, 2016, 07:35:26 AM
eurobank imploding, at €0.58 now valued at 22% pro forma post recap tbv

http://www.morningstar.com/stocks/xfra/efgd/quote.html

All European banks have been imploding recently. Not just Eurobank. That being said, I've been waiting to re-establish a position - glad I sold at the equivalent of $1.50-2.00.

I just feel a little wary given that is the second recapitalization that the bank has walked all over common shareholders in. It just makes you lose your appetite for that sort of risk...

Go big or go home  ;D

I don't mind investing in risky situations if I'm expecting to be treated fairly, but that clearly didn't happen here and I'm wary of two-tier investments where some shareholders make out like bandits while the rest take the full weight of the loss. It leaves a bad taste in my mouth.

Eurobank is still attractive for all the same economic reasons as it was previously, but I don't quite know what the premium should be for the people in charge being set against you in the event anything goes wrong since I'm a "lower-tier" investor. I might stay away from this for the same reasons I stayed away from BH - I clearly can't trust those in charge to consider my interests.
Title: Re: EGFEY - Eurobank
Post by: rijk on February 08, 2016, 03:12:38 AM
wow, at €0.43 eurobank is trading at 16% tbv.......

either greece and the euro are finished or investors are hyper nervous.....

http://www.morningstar.com/stocks/xfra/efgd/quote.html
Title: Re: EGFEY - Eurobank
Post by: MrB on February 08, 2016, 07:04:06 AM
wow, at €0.43 eurobank is trading at 16% tbv.......

either greece and the euro are finished or investors are hyper nervous.....

http://www.morningstar.com/stocks/xfra/efgd/quote.html

You mean €0.38   :P

“There’s a complete buyers’ strike across the board today, ”  http://www.bloomberg.com/news/articles/2016-02-08/greek-stocks-head-for-lowest-level-since-1990-as-banks-tumble
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on February 10, 2016, 07:42:46 AM
wow, at €0.43 eurobank is trading at 16% tbv.......

either greece and the euro are finished or investors are hyper nervous.....

http://www.morningstar.com/stocks/xfra/efgd/quote.html

You mean €0.38   :P

“There’s a complete buyers’ strike across the board today, ”  http://www.bloomberg.com/news/articles/2016-02-08/greek-stocks-head-for-lowest-level-since-1990-as-banks-tumble

Down another 10% to €0.345. Bizarre - I would have thought that all of the holders left would be strong-hands, but clearly people have needed to get out if they're selling it at a 65% loss from the recap...

Anyone have a source on recent flows to the banking sector. Are we seeing client deposits return after the recaps or is money still flowing out of the system? Also, anyone have a recent update on the capital controls?
Title: Re: EGFEY - Eurobank
Post by: rijk on March 03, 2016, 12:44:26 AM
2015 results

35% npl, 65% coverage
44% npe, 52% coverage
npe provision & collateral coverage 102%
tbv/share €2.45

plenty of work to be done but figures could be called cautiously optimistic?
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 03, 2016, 07:39:57 AM
2015 results

35% npl, 65% coverage
44% npe, 52% coverage
npe provision & collateral coverage 102%
tbv/share €2.45

plenty of work to be done but figures could be called cautiously optimistic?

The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players.

Somehow BoC draws far less investor interest on this board. Any reasons?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 03, 2016, 07:56:36 AM
2015 results

35% npl, 65% coverage
44% npe, 52% coverage
npe provision & collateral coverage 102%
tbv/share €2.45

plenty of work to be done but figures could be called cautiously optimistic?

The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players.

Somehow BoC draws far less investor interest on this board. Any reasons?

Probably because of Prem and Ross' involvement. I'm not able to do the deep diligence needed to determine asset quality so the fact that there in it gets me more comfortable that someone has done that diligence for me.

That being said, the recent recap ought to leave as bad a taste in everyone's mouth as the bail-in that occurred in Cyprus.
Title: Re: EGFEY - Eurobank
Post by: MrB on March 03, 2016, 09:20:37 AM
2015 results

35% npl, 65% coverage
44% npe, 52% coverage
npe provision & collateral coverage 102%
tbv/share €2.45

plenty of work to be done but figures could be called cautiously optimistic?

The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players.

Somehow BoC draws far less investor interest on this board. Any reasons?

I agree with the general logic that there might be an arbitrage here, but I think the slowdown in momentum of the reforms in Cyprus is a concern, as well as the announcement and retraction of Hourican's departure. I think in this case the "family reasons" are credible, but it still dented confidence.
The question is at what price is the difference significant enough to switch?
Title: Re: EGFEY - Eurobank
Post by: rijk on March 08, 2016, 12:42:39 AM
positive developments....

Euro zone to discuss Greek debt relief soon, after reform review

http://uk.reuters.com/article/us-eurozone-greece-debt-idUKKCN0W91Q2
Title: Re: EGFEY - Eurobank
Post by: muscleman on March 10, 2016, 07:56:55 AM
2015 results

35% npl, 65% coverage
44% npe, 52% coverage
npe provision & collateral coverage 102%
tbv/share €2.45

plenty of work to be done but figures could be called cautiously optimistic?

The results are weaker than Bank of Cyprus. Bank of Cyprus trades at a similar valuation but the economy is in a better shape. Also BoC/Hellenic are the duopolies. But in Greece there are four players.

Somehow BoC draws far less investor interest on this board. Any reasons?

I agree with the general logic that there might be an arbitrage here, but I think the slowdown in momentum of the reforms in Cyprus is a concern, as well as the announcement and retraction of Hourican's departure. I think in this case the "family reasons" are credible, but it still dented confidence.
The question is at what price is the difference significant enough to switch?

The valuation for BoC vs EGFEY in terms of price/book value is similar. However the macro environment is vastly different.

"economic growth of 1.6 per cent, a nearly balanced budget with a primary surplus of around 2.5 per cent, a steadily reducing public debt"
http://www.jordantimes.com/opinion/nikos-christodoulides/cyprus-economy-turning-page

I believe the macro stabilization gives you the margin of safety for banks, not the price/book ratio. We all know what happened when the price/book ratio makes it looks like cheap and then a recapitalization kicks in.

In addition, BoC and Hellenic banks are the only players in town. Hellenic is way smaller than BoC. But in Greece you got four players.

With that said, I haven't studied EGFEY for quite a few months, so maybe the situation is turning now?
Title: Re: EGFEY - Eurobank
Post by: rijk on March 12, 2016, 12:58:04 AM
fairfax letter

2015 was very turbulent for Greece as it went through a referendum, had capital controls imposed on its banking
system, had another election which resulted in a majority government for the Syriza party and was trying to cope
with an unprecedented migration of refugees from Syria. Prime Minister Tsipras appointed Euclid Tsakalotos as
Finance Minister. Recently, we took ten institutional investors to Greece for an update from the Prime Minister and
the Finance Minister. While there are no guarantees in life, it seems to us that the Greek government and the citizens
of Greece have clearly rejected leaving the euro (going back to the drachma) and are implementing the reform
program required by the Troika. In spite of the massive uncertainties in Greece in 2015, the economy was flat and
unemployment came down from 27.9% in 2013 to 24.6%. Housing construction is down over 90% from the high
while automobile sales are down 75% from the top. Greece’s economy has hit bottom and given some stability in the
political environment, should recover strongly, not unlike Ireland in the last few years.
With this as a backdrop, we experienced one of our largest unrealized losses ever in our holdings of Eurobank. As
discussed in last year’s Annual Report, in 2014, as part of a large group of institutional investors investing A2.9 billion
so as to allow Eurobank to successfully pass the ECB stress test, we invested A400 million at 31 euro cents per share in
Eurobank. With the uncertainties of 2015 discussed above and the bank capital controls, the ECB imposed another
very severe stress test on the Greek banks that resulted in an additional capital raise of A2.039 billion at 1 euro cent
per share – yes, you read that right – 1 euro cent!! At that price, after the issue, Eurobank was selling at 39% of book
value and 3.1 times normalized earnings. We invested A350 million for an average total cost per share of 2.2 euro
cents versus a book value of 2.5 euro cents per share and a normalized price/earnings ratio of 6.9 times.
After a consolidation of 100 to 1, Eurobank began trading at A1 per share. Early in 2016, Eurobank, in sympathy with
other European banks, declined to 30 euro cents per share; it is now trading at about 77 euro cents per share.
Unbelievable! And they say markets are efficient! We continue to be confident in the management team of Eurobank
with Fokion Karavias as CEO and Nikos Karamouzis as Chairman.
Our other Greek investments – Grivalia, led by George Chryssikos, Praktiker Greece, led by Ioannis Selalmazidis and
Mytilineous, led by Evangelos Mytilineos – continue to do well in a very difficult economic environment. We are
very fortunate to have Wade Burton, a member of our Investment Committee, leading the charge on our Greek
investments. Brad Martin, also on the Board of Eurobank, has backed him well. Our time will come in Greece!
Title: Re: EGFEY - Eurobank
Post by: MrB on May 17, 2016, 09:24:23 AM
FROM REUTERS - UPDATE 1-Greek lender Eurobank posts first quarterly profit since 2011
11:32 AM Eastern Daylight Time May 17, 2016
    * Eurobank posts profit of 60 mln euros in first quarter
    * Non-performing credit drops to 34.8 pct of loan book
    * Bad debt provisions fall 33.4 pct from end of 2015

 (Adds CEO comment, details)
    By George Georgiopoulos
    ATHENS, May 17 (Reuters) - Greek lender Eurobank <EURBr.AT>
reported its first quarterly profit since 2011 in the first
three months of the year, helped by lower provisions for bad
loans and stronger net interest income.
    Kicking off the earnings season for Greek banks, the
third-largest lender by assets reported net profit of 60 million
euros ($68 million) after a loss of 175 million euros in the
final quarter of 2015.
    It was Eurobank's first profitable quarter since the third
quarter of 2011.
    "The results confirm that Eurobank is on course to achieve
its main aim, to be profitable in 2016. We had the first
positive result after five years of unprecedented challenges in
the Greek banking system," Chief Executive Fokion Karavias said
in a statement.
    Greek banks are still troubled by large problem loan
portfolios after the country's deep, protracted recession pushed
unemployment to record highs, making it hard for borrowers to
service their debts.
    More than 40 percent of the sector's loans are
Title: Re: EGFEY - Eurobank
Post by: rijk on May 24, 2016, 11:10:03 PM
In an agreement announced early Wednesday, Greece won additional pledges of debt relief, but nothing substantial until 2018 at the earliest, and only then if it continues to carry out painful reforms. Even so, the accord could help ease concerns about another flare-up of a crisis in Greece as the region deals with a mass influx of migrants and a continuing terrorist threat.

Eurozone finance ministers also gave a green light for the next round of aid for Greece, money that would allow the country to pay bills in the coming months. Further final approvals for those disbursements will be needed, but ministers allocated 10.3 billion euros, or about $11.5 billion, for Greece, to be distributed in several stages starting with €7.5 billion as soon as the second half of June.


http://www.nytimes.com/2016/05/25/business/international/greece-debt-relief-imf-eurozone-bailout.html
Title: Re: EGFEY - Eurobank
Post by: vjrao on September 01, 2016, 07:02:00 AM
Eurobank just released Q2 2016 results. I am cautiously optimistic. From the press release:

 Net profit at €46m in 2Q2016 and €106m in 1H2016
 Net interest income up 1.3% q-o-q to €388m
 Fee and commission income up 5.1% q-o-q to €71m
 Operating expenses down 2.0% y-o-y
 Core pre-provision income up 5.8% in 2Q2016 and 16.6% in 1H2016
 First quarter of negative 90dpd formation (-€16m)
 Cost of risk 2.0% in 1H2016
 Deposits up by €677m in Greece and €1.1bn in total in 2Q2016
 ELA funding decreases by €4.6bn March-to-date
 Common Equity Tier 1 Ratio at 17.0%
 Consistently profitable international operations: Net profit at €30m in 2Q2016

Links to the press release and presentation are here:
https://www.eurobank.gr/UPLOADS/PDF/PR_RESULTS_Q2_2016_EN.pdf
https://www.eurobank.gr/UPLOADS/PDF/2Q2016_Results_Presentation.pdf
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 24, 2017, 09:23:16 AM
https://www.bloomberg.com/news/articles/2017-03-23/greek-deposits-bleeding-drama-resumes-amid-bailout-uncertainty (https://www.bloomberg.com/news/articles/2017-03-23/greek-deposits-bleeding-drama-resumes-amid-bailout-uncertainty)

http://www.tradingeconomics.com/greece/capital-flows (http://www.tradingeconomics.com/greece/capital-flows)

If Greece bankrupts its banks again...

Tough situation to be in now that the E.U. called their bluff. Even IMF agrees the debt and terms of the bailouts are unsustainable, but since Greece gave up on its willingness to leave, the E.U. can force it do whatever it wants and Greece will have to do it.

Interested in picking up shares here at $0.25, but was burned badly the first time through...
Title: Re: EGFEY - Eurobank
Post by: rijk on July 04, 2017, 01:59:31 AM
sounds like this could be a win win deal, eurobank finally makes some progress with restructuring and fairfax gets cheap assets? or are fairfax/pimco simply "stealing" ultra cheap assets? i hope that there has been a decent bidding process......

https://www.eurobank.gr/online/home/ViewNews2.aspx?id=2233&lang=en
Title: Re: EGFEY - Eurobank
Post by: lemsinge on October 07, 2017, 02:33:38 PM
Seems Kyle Bass is bullish about Greece and is long its banks.

https://www.bloomberg.com/news/articles/2017-10-06/bass-bets-greek-elections-called-within-a-year-spurring-rally

https://www.bloomberg.com/view/articles/2017-09-19/the-imf-needs-to-stop-torturing-greece
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 16, 2017, 07:27:12 PM
Seems Kyle Bass is bullish about Greece and is long its banks.

https://www.bloomberg.com/news/articles/2017-10-06/bass-bets-greek-elections-called-within-a-year-spurring-rally

https://www.bloomberg.com/view/articles/2017-09-19/the-imf-needs-to-stop-torturing-greece

Eurobank is down another 20% since this - seems like it's getting attractive again @ 20% of book - especially when considering pre-provision income....

But then again, every entry point has simply been a head-fake so far.
Title: Re: EGFEY - Eurobank
Post by: Cameron on November 16, 2017, 08:50:55 PM
35.2% of the total loan book is still NPL's and NPE's are still in the 40% range, the texas ratio is still way to high.

They also have $6 billion in equity with $4.9 billion in deferred tax assets. Their RWA leverage ratio is still high.

However there are definitely opportunities in the financial sector, EUPIC is one of my holdings, there are a bunch of areas outside the financial sector. Investing in Greek banks is still playing with fire and the risk reward makes no sense, the likelihood you leave with only a small portion of your capital is still high. So I'm not to sure why he feels now is a good time to invest in Greek banks. 

Just my 2 cents into Greek investing.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on November 16, 2017, 09:38:15 PM
35.2% of the total loan book is still NPL's and NPE's are still in the 40% range, the texas ratio is still way to high.

Yes, but formation was negative over the last quarter which is a nice place to be if the trend continues. And, as Bass points out, if loan growth started again, this ratio would drop dramatically as the denominator would expand with good loans. The ratio would be attacked at both the numerator and denominator and drop quickly IF this is the turn-around for the Greek economy.

Agreed on RWAs, but also doesn't quite matter if the wind is blowing at your back instead of in your face. Every year, a portion of the DTAs would be converted to cash which would be tangible equity.

If you truly believe a recovery is around the corner, it makes sense to be bullish on the banks. It's only if you're wrong that things like the NPEs and tangibility of the RWAs matters.

I'm considering nibbling here even though I was burned before. Will wait for another 2-3 quarters of confirming trends before I take a larger bite for the reasons you have pointed out.
Title: Re: EGFEY - Eurobank
Post by: Cameron on November 16, 2017, 10:32:54 PM
35.2% of the total loan book is still NPL's and NPE's are still in the 40% range, the texas ratio is still way to high.

Yes, but formation was negative over the last quarter which is a nice place to be if the trend continues. And, as Bass points out, if loan growth started again, this ratio would drop dramatically as the denominator would expand with good loans. The ratio would be attacked at both the numerator and denominator and drop quickly IF this is the turn-around for the Greek economy.

Agreed on RWAs, but also doesn't quite matter if the wind is blowing at your back instead of in your face. Every year, a portion of the DTAs would be converted to cash which would be tangible equity.

If you truly believe a recovery is around the corner, it makes sense to be bullish on the banks. It's only if you're wrong that things like the NPEs and tangibility of the RWAs matters.

I'm considering nibbling here even though I was burned before. Will wait for another 2-3 quarters of confirming trends before I take a larger bite for the reasons you have pointed out.

Thats the problem for me at least I can find cheap companies in Greece but I don't know if that necessarily makes me bullish on Greece from a macro framework. Here is what I'm trying to say, why try to time the Greek recovery through banks that are worth nothing in the event that things don't improve in the near future because they will have to recapitalize the banks soon if they don't which is what it sounds like Bass is trying to do or pick up the scraps that are trading at sub 5 P/E ratios and crazy discounts to book value even after asset write downs that took place 7 years ago that have proven themselves throughout the crisis.

I agree with waiting, the reason being is that lets say the outcome is between the good and best case scenario, I still think shares will be cheap because of the stigma of it being a Greek Bank. It will be interesting to watch.
Title: Re: EGFEY - Eurobank
Post by: Cameron on November 16, 2017, 11:06:25 PM
I forgot, about the DTA's, they are an accounting asset and its not an asset that returns capital. In the event that the economy does recover and they can use those DTA's it will have suppression effect on ROE, Citigroup had and still has this problem.

But that assumes that the economy does recover, if they can't use them they are worthless.
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on October 03, 2018, 01:15:19 PM
35.2% of the total loan book is still NPL's and NPE's are still in the 40% range, the texas ratio is still way to high.

Yes, but formation was negative over the last quarter which is a nice place to be if the trend continues. And, as Bass points out, if loan growth started again, this ratio would drop dramatically as the denominator would expand with good loans. The ratio would be attacked at both the numerator and denominator and drop quickly IF this is the turn-around for the Greek economy.

Agreed on RWAs, but also doesn't quite matter if the wind is blowing at your back instead of in your face. Every year, a portion of the DTAs would be converted to cash which would be tangible equity.

If you truly believe a recovery is around the corner, it makes sense to be bullish on the banks. It's only if you're wrong that things like the NPEs and tangibility of the RWAs matters.

I'm considering nibbling here even though I was burned before. Will wait for another 2-3 quarters of confirming trends before I take a larger bite for the reasons you have pointed out.

Thats the problem for me at least I can find cheap companies in Greece but I don't know if that necessarily makes me bullish on Greece from a macro framework. Here is what I'm trying to say, why try to time the Greek recovery through banks that are worth nothing in the event that things don't improve in the near future because they will have to recapitalize the banks soon if they don't which is what it sounds like Bass is trying to do or pick up the scraps that are trading at sub 5 P/E ratios and crazy discounts to book value even after asset write downs that took place 7 years ago that have proven themselves throughout the crisis.

I agree with waiting, the reason being is that lets say the outcome is between the good and best case scenario, I still think shares will be cheap because of the stigma of it being a Greek Bank. It will be interesting to watch.

And one year later, the share price is right back where it was. Full circle!

Interesting to watch indeed. Glad I only nibbled.
Title: Re: EGFEY - Eurobank
Post by: petec on November 26, 2018, 03:33:37 AM
Eurobank and Grivalia have just announced that they will merge. Fairfax will own 33% of the newco.

The merger creates a much better capitalised banking group - in effect it is an equity issue by Eurobank in return for a cheap asset. It's accretive (for what that's worth) to earnings and capital ratios but dilutive to Eurobank's bvps.

The merger also gives Grivalia's excellent management team operating control over the big Eurobank real estate portfolio.

Eurobank has also announced plans to speed up bad loan reductions by securitising them and spinning the securities out to shareholders. This cleans the bank's balance sheet but allows shareholders to participate in any upside.

Fairfax controls Grivalia and has seats on both boards so this isn't happening without their approval.

Links:

https://www.eurobank.gr/-/media/eurobank/omilos/grafeio-tupou/etairikes-anakoinoseis/2018/etairiki-anakoinosi-26-11-18/etairiki-anakoinosi-26-11-18-eng.pdf?la=en

https://www.eurobank.gr/-/media/eurobank/omilos/grafeio-tupou/etairikes-anakoinoseis/2018/etairiki-anakoinosi-26-11-18/investor-presentation.pdf?la=en
Title: Re: EGFEY - Eurobank
Post by: petec on March 14, 2019, 10:09:15 AM
If this used to be on your radar and dropped off, it might be worth kicking the tyres again. The economy is growing, real estate prices are rising, deposits are flowing in, and in 2019 the company will sell or spin a large proportion of its non-performers such that in 2020 they will start provisioning at normalised levels, profits will jump, the DTA will start turning to cash, and capital will accrete.
Title: Re: EGFEY - Eurobank
Post by: lathinker on March 14, 2019, 01:30:10 PM
petec,

thanks for bringing this up. I think this is a very interesting situation given what I perceive to be a highly creative "stealth recapitalization" of a decent bank with an NPL problem through a lowly levered REIT. If the merger goes through, they have a decent shot of cleaning up their NPL in a manageable period of time.
The spin-off of certain tranches of the NPL securitisation to shareholders feels even more interesting and will combine characteristics of a Greenblatt spinoff situation (people getting securities they have nouse for) with the arguably least popular asset class one might imagine (NPLs in the economically least successful country of the last decade). So definitely worth to stay tuned here.

I own a tiny position
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 14, 2019, 03:45:31 PM
petec,

thanks for bringing this up. I think this is a very interesting situation given what I perceive to be a highly creative "stealth recapitalization" of a decent bank with an NPL problem through a lowly levered REIT. If the merger goes through, they have a decent shot of cleaning up their NPL in a manageable period of time.
The spin-off of certain tranches of the NPL securitisation to shareholders feels even more interesting and will combine characteristics of a Greenblatt spinoff situation (people getting securities they have nouse for) with the arguably least popular asset class one might imagine (NPLs in the economically least successful country of the last decade). So definitely worth to stay tuned here.

I own a tiny position

I don't think it's a direct spin-off to shareholders. The way I understand it, the bank is restructuring I to a holding co and a bank. The bank will spin-off certain non performing loans to the Hold Co so shareholders still have exposure to upside even if the bank no longer has exposure. You won't be receiving any additional securities from this.
Title: Re: EGFEY - Eurobank
Post by: lathinker on March 15, 2019, 01:10:51 PM
petec,

thanks for bringing this up. I think this is a very interesting situation given what I perceive to be a highly creative "stealth recapitalization" of a decent bank with an NPL problem through a lowly levered REIT. If the merger goes through, they have a decent shot of cleaning up their NPL in a manageable period of time.
The spin-off of certain tranches of the NPL securitisation to shareholders feels even more interesting and will combine characteristics of a Greenblatt spinoff situation (people getting securities they have nouse for) with the arguably least popular asset class one might imagine (NPLs in the economically least successful country of the last decade). So definitely worth to stay tuned here.

I own a tiny position

I don't think it's a direct spin-off to shareholders. The way I understand it, the bank is restructuring I to a holding co and a bank. The bank will spin-off certain non performing loans to the Hold Co so shareholders still have exposure to upside even if the bank no longer has exposure. You won't be receiving any additional securities from this.

Thanks for pointing out. I had a different understanding and checked in the presentations.
- Page 17 of the November 2018 presentation states "Listing and distribution of B1 Mezzanine and Junior Notes to Eurobank's shareholders.
- In the 2019 presentation they say "Potential listing and distribution of B1 Mezzanine and Junior notes to Eurobank’s shareholders"

So, after all, it may not be clear yet. Why do you understand there will be not listing/distribution?
Title: Re: EGFEY - Eurobank
Post by: TwoCitiesCapital on March 17, 2019, 08:26:30 PM
petec,

thanks for bringing this up. I think this is a very interesting situation given what I perceive to be a highly creative "stealth recapitalization" of a decent bank with an NPL problem through a lowly levered REIT. If the merger goes through, they have a decent shot of cleaning up their NPL in a manageable period of time.
The spin-off of certain tranches of the NPL securitisation to shareholders feels even more interesting and will combine characteristics of a Greenblatt spinoff situation (people getting securities they have nouse for) with the arguably least popular asset class one might imagine (NPLs in the economically least successful country of the last decade). So definitely worth to stay tuned here.

I own a tiny position

I don't think it's a direct spin-off to shareholders. The way I understand it, the bank is restructuring I to a holding co and a bank. The bank will spin-off certain non performing loans to the Hold Co so shareholders still have exposure to upside even if the bank no longer has exposure. You won't be receiving any additional securities from this.

Thanks for pointing out. I had a different understanding and checked in the presentations.
- Page 17 of the November 2018 presentation states "Listing and distribution of B1 Mezzanine and Junior Notes to Eurobank's shareholders.
- In the 2019 presentation they say "Potential listing and distribution of B1 Mezzanine and Junior notes to Eurobank’s shareholders"

So, after all, it may not be clear yet. Why do you understand there will be not listing/distribution?

There was a chart of the reorganized entity and the spin-off of the assets in the earnings presentation that gave me that impression. P.45-48

https://seekingalpha.com/article/4247025-eurobank-ergasias-sa-adr-2018-q4-results-earnings-call-slides

EDIT: though after second review, it looks like I was recalling phase 2 on p.47. Phase 3 on page 48 does look like a spin directly to shareholders from the Hold Co so...looks like I might be wrong.