EUROCORP

Financial Morning News 30/10/2012

GREEK FINANCIAL MARKET

The General Index in Athens Stock Exchange (ASE) closed at 819.61 posting heavy losses of 6.28%, after rumours of far-from-favourable recapitalization terms, in a turnover of €115.26mn. The banking sector took its worst beating in the last 12 months, as the refusal by Greece’s creditors to allow Greek banks to swap their state bonds with EFSF securities disappointed the market.

The European Commission spokesman Mr. Simon O’ Connor said that there is no specific timetable for the troika of official lenders to complete their talks with Greece. We remind that the euro-zone will hold a conference call on tomorrow. The Luxembourg’s Jean-Claude Juncker said that a meeting of ministers will probably hold on November 8, but decisions are unlikely at this meeting.

The German government spokesman Mr. Steffen Seibert said that a write-down of Greece’s debt is out of the question. He added that no date of when the troika report will be presented has yet been set, although all parties are working with great pressure.

The French President Mr. Francois Hollande said that France will wait for a report of a troika, before deciding on the best way to approach the problem. The troika report is expected in coming days and he added that he wants the Euro-group of finance ministers to find a “durable” solution to Greece’s debt problems at their November meeting. The IMF chief Ms. Christine Lagarde is due in Berlin today for talks with the German Chancellor Ms. Angela Merkel after meeting in Paris yesterday with the French President Mr. Francois Hollande.

The Governing Council member Mr. Ewald Nowotny said that the ECB is banned from taking part in a Greek debt restructuring, because it would be tantamount to printing money to finance governments.

Corporate Impacts

  • Greek Banks:The banks will delay announcing their six-month results for another month to the end of November, as Greece works to finalize the recapitalization plan for its struggling financial sector. According to press reports, banks will be required to maintain a Common Equity Ratio of 6% on risk weighted assets and a Core Tier 1 of 9% and as a result the relationship between common shares and CoCos will vary depending on the amount of existing common equity. The shareholders who participate in the capital increase process will receive warrants, enabling them to buy shares from HFSF. The warrants will be listed and they will be exercisable every six months In addition to this, the HFSF did not accept the Greek Government Bonds to be marked at par value, but it accepted the calculation of deferred tax assets in the capital ratios.
  • Technical

    FTSE 20 September future:

      Support levels: 302-296-288. Resistance levels: 314-322-330.

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