Banking in Greece with the National Bank of Greece

NBG was severely impacted by the economic and fiscal crisis in Greece which began as early as 2010 but reached a peak intensity in 2012. Since that time, the bank has marked down assets, participated in the debt exchange for holders of Greek government bonds and issued shares to recapitalize after recognizing greater than 10 Billion EUROs in losses.

National Bank of Greece NBG

Only in the most recent six months has the overall business of NBG stabilized enough to stop the succession of losses. The banking business in Greece remains impaired by the ongoing economic crisis although business appears to have stabilized in recent months.

Existing shareholders have been entirely diluted over the last five years in order to keep the bank out of receivership. The Greek Government now holds a senior position in the capital structure and dividends for common shareholders are not forthcoming in the near future.

The bank dominates the financial industry in Greece. However, the Greek economy and state are presently so weak and dysfunctional that the bank now has to suffer the will of the government who insist that credit must be extended to the economy while balancing the myriad risks of lending in a distressed economy. The business is stable but due to bailout and recap, but the Greek government exerts significant control over strategy and management. National Bank of Greece is now a government controlled company.

Via the Greek Government’s Hellenic Financial Stability Fund, the Greek state owns greater than 50% of the outstanding shares.


An objective hypothesis anticipating several future corporate developments

The single question that dominates the future trajectory of NBG is whether the worst is over for the Greek economy, which remains to be seen as the entire European Zone appears to slip back into recession and outright deflation.  On the plus side Greece has effectively had it’s default and a lot of its problems are behind it with a lot of debt being forgiven and restructured in other cases. Interest rates have been lowered for debt and the country now has a very long runway to work things out.


  • Going forward, National Bank of Greece is likely to survive despite continued economic weakness but in a role that supports the Greek economy and not as a private institution meant to maximize returns for shareholders. Effectively, this bank has been nationalized and remaining shareholders invest for the potential future where the Greek and by extension south eastern European economy is robust and healthy allowing the Greek government to (maybe) exit their investment and normalize operations as a private enterprise.
  • As the Greek government exerts more control, National Bank of Greece is likely to shed non-core operations especially any outside the Eurozone. Expect the overall business to contract around core operations which can be tightly managed and controlled by the state. National Bank of Greece aims to reduce its current stake in Turkish unit Finansbank to 60 percent by the end of 2015.
  • Going forward, one needs to monitor provisions for loan losses and capital ratios as the bank returns to health. Have they adequately marked down their bad inventory or do they continue to carry bad loans at unfair values much as Japanese banks did throughout the lost decade of the 90s.


Corporate Structure 

National Bank of Greece is a holding company for a collection of banking and financial assets and operations concentrated in Greece but includes operations in Turkey, Bulgaria, Serbia, Romania, Albania, Cyprus and Macedonia.


Details of large or controlling shareholders

As stated, the Greek state owns a controlling interest in NBG. As a shareholder, you are the minority partner of the Greek government!


Market Capitalization 

2,396,785,994 Ordinary Shares of nominal value EUR 0.30 per share

12,639,831 Series A Preference Shares of a nominal value of EUR 0.30 per share

270,000,000 Redeemable Preference Shares of a nominal value of EUR 5.00 per share issued to the Hellenic Republic

  • The ordinary shares and Series A Preference shares trade as ADRs on the NYSE.
  • 270,000,000 preference shares were issued to the Greek government and pay a 10% fixed return.

Shareholder Equity and Book Value 

As a result of the bailout of the National Bank of Greece by the Greek government with help from the IMF and the ECB, shareholder equity has returned to positive levels. Most recently, equity attributable to NBG shareholders was reported at 10.8 Billion EURO versus a market cap of about 10B USD based on ADR share values. The company trades for less than book value which is not unexpected considering the bank teetered on the edge of insolvency for several years prior to being recapitalized.

InvestCorrectly Staff
InvestCorrectly Staff

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