Even as the crisis in Greece is deepening with an ultimatum to come up with sweeping proposals or face the exit from the Europe, there is one company that appears to be gaining. That is National Bank of Greece (ADR) (NYSE:NBG)’s owned Finansbank AS in Turkey. The reason is the potential sale of the company in Turkey.
Running Out Of Money
Lenders in Greece appear to be running out of money. Therefore, the speculation is rife that National Bank of Greece (ADR) (NYSE:NBG) will sell either part of its stake in Finansbank AS of Turkey. As a result, shares of the financial institution witnessed the significant gain after 2011. The perception for the significant gain is that new ownership would boost the capital requirements and stimulate growth, which was lacking because of the parent company’s priority back at home.
The bonds from the bank have also witnessed a growth after the country defaulted on its payment to the International Monetary Fund. Greek is struggling for money after its people voted ‘no’ for the bail-out terms sponsored by European Union.
Well-Run Bank
BNP Paribas Investment Partners’ unit, Fischer Francis Trees & Watts’ Money Manager, Velihan Erdogdu, told Bloomberg that Finansbank is a well-managed bank with strong fundamentals. Therefore, it was a crown of a jewel for National Bank of Greece (ADR) (NYSE:NBG). The parent company gained from its subsidiary in the past year. For instance, Finansbank earned a profit of $352 million or Euros 318 million last year whereas the parent firm suffered a loss of Euros 283 million.
The current situation in the country leaves little chance for the Greek’s biggest bank. National Bank of Greece (ADR) (NYSE:NBG) is having a stake of 40% in Finansbank, and will have to divest it to manage its situation at home. The full market value of the Turkey’s firm is said to be around $3.8 billion. A bidding war is in the cards.
National Bank of Greece S.A. (NBG), incorporated in 1841, is a commercial bank. The Bank offers its customers a range of integrated financial services, including corporate and investment banking; retail banking (including mortgage lending); leasing and factoring; stock brokerage, asset management and venture capital; insurance; and real estate and consulting services. In addition, the Bank is involved in various other businesses, including hotel and property management. Its core focus outside of Greece is in Turkey and South Eastern Europe (SEE), where the Bank operates in Bulgaria, Serbia, Romania, Albania, Cyprus and FYROM. The Bank manages its business through business segments, including Retail Banking, Corporate & Investment Banking, Global Markets and Asset Management, Insurance, International Banking Operations, Turkish Banking Operations and Other. NBG had 528 branches and 1,414 automatic teller machines (ATMs), as of December 31, 2014.
Most of its banking business is domestic and includes retail, corporate and investment banking. Banking activities in Greece include the Bank’s domestic operations, Ethniki Leasing, Probank Leasing S.A. (Probank Leasing) and Ethniki Factors S.A. (Ethniki Factors). As of December 31, 2014, the Bank operated in Greece through 528 branches (including one premium branch in Golden Hall) and one private banking unit. As of December 31, 2014, the Bank had 1,414 ATMs, of which at least 561 were situated in key locations, such as supermarkets, metro stations, shopping centers, hospitals and airports (57% of its ATMs are equipped with cash deposit devices). The Bank operates a contact center, through which the Bank provides information and transaction services through the use of a voice portal and a manned help desk. The Bank operates four i-bank stores (two in Athens and two in Thessaloniki), which offer all i-bank services (Internet, mobile and phone banking, ATM) and where the Bank also hosts entertainment and educational events.
The Bank participates in DIAS Interbanking Systems S.A., which has 27 banks as shareholders and direct members, including the Bank. DIAS Interbanking Systems provides interbank services, such as check clearing, ATM networking, fund transfers and payroll and pension services. The Bank provides certain banking services over the Internet, including the transfer of funds between accounts, balance inquiries, bill payments, stock brokerage services and subscriptions to initial public offerings on the Athens Exchange (ATHEX). Savings and investment products of the Bank are offered both in euro and in other currencies. The Bank offers payment services to its clients participating in all local interbank payment channels. The Bank is also a direct member of the Euro interbank channels of TARGET, TARGET2, EBA for Euro 1, Step 1 and Step 2. For payments, especially outside the Eurozone, the Bank maintains a global network of correspondent banks.
Retail Banking
The Bank’s Retail banking segment includes all individual customers, professionals, small-medium and small sized companies in Greece. The Bank, through its network of branches, offers to its retail customers various types of loan, deposit and investment products, as well as a range of other traditional services and products. The Small Business Lending Unit (SBL Unit) constitutes a division of its retail banking. The SBL Unit has created business credit centers in the main three urban centers (Athens, Thessaloniki and Patras), which handle all of the Bank’s credit applications in accordance with applicable credit and collection policy and approved authority levels. The relevant products offered by SBL Unit are rescheduling, restructuring and restructuring over restructuring (R-O-R) programs.
Corporate and Investment Banking
The Bank’s Corporate & Investment banking segment includes lending to all large and medium-sized companies, shipping finance and investment banking activities. The Bank offers its corporate customers a range of products and services, including financial and investment advisory services, deposit accounts, loans (denominated in both Euro and foreign currency), foreign exchange and trade service activities. The Bank offers corporate clients a range of products and services, including financial and investment advisory services, deposit accounts, loans denominated in euro and other currencies, foreign exchange services, insurance products, custody arrangements and trade finance services. The Bank lends primarily in the form of short term credit lines and medium/long term loans. Apart from financing, the Bank provides letters of credit and guarantees for its customers.
The Bank’s shipping finance activities are carried out almost through its Piraeus-based unit. The Bank provides bilateral and syndicated long-term financing, mainly towards dry bulk, wet bulk and liner business. Nearly all of the Bank’s shipping loans are secured by vessels. The Bank’s project finance loan portfolio includes loans to infrastructure projects both in Greece and abroad (mainly in Europe). The Bank performs its leasing activities through its subsidiary, Ethniki Leasing. Ethniki Leasing leases land and buildings, machinery, transport equipment, furniture and appliances, computers and communications equipment. Probank Leasing leases land and buildings, machinery, transport equipment, furniture and appliances, computers and communications equipment. It also offers factoring services and investment banking services.
Global Markets and Asset Management
The Bank’s Global Markets and Asset Management segment includes all treasury activities, private banking, asset management (mutual funds and closed end funds), custody services, private equity and brokerage. The Bank and each of its banking subsidiaries carry out their own treasury activities within the prescribed position and counterparty limits. These activities include Greek and other sovereign securities trading; foreign exchange trading; interbank lending and borrowing in euro and other currency placements and deposits; forward rate agreement trading; repurchase agreements; corporate bonds; and derivative products, such as options and interest rate and currency swaps. NBG Private Banking (Private Banking) is the Bank’s dedicated arm that responds to the needs of high net worth and ultra-high net worth clients. The Bank operates out of eight different locations in Greece and two international Private Banking centers in London and Malta.
The Bank offers custody services to foreign institutional clients investing in the Greek and Cypriot markets, in addition to providing clearing services to remote members of the ATHEX and services to domestic institutional clients investing globally. Especially in SEE, the Bank is using, as sub-custodians, its subsidiaries in the region. The Bank also offers custody services to its retail customer base. The range of services the Bank offers includes trade settlement, safekeeping of securities, corporate action processing, income collection, proxy voting, tax reclamation, paying agency, underwriting, customized reporting and regular market flashes. Its domestic fund management business is operated by NBG Asset Management, which is wholly owned by the Bank. NBG Asset Management manages funds that are made available to customers through the Bank’s branch network.
NBG Asset Management offers 20 investment funds under the brand name Delos, two under the NBGAM brand name, one under the N. P. INSURANCE brand name and three under the NBG International SICAV brand name, which are registered in Luxemburg. NBG Asset Management offers a range of investment products that provide to institutional and private investors access to markets in stocks, bonds and money market products, in Greece and internationally. NBG Securities S.A. constitutes the Bank’s brokerage arm. NBG Securities S.A. offers a spectrum of investment services to both individual and institutional customers. With offices in London, Paris and Istanbul, NBGI Private Equity Limited (NBGI Private Equity), a subsidiary of NBGI International Ltd, manages the private equity funds.
Insurance
The Bank offers a range of insurance products through its subsidiary company, EH and other subsidiaries in SEE and an associate in Turkey. EH offers a range of products including life, accident and health insurance for individuals and groups, fire, catastrophe, motor, marine hull and cargo insurance, and general third-party liability insurance. EH operates through a network of 13 branches, 158 sales bureaus, 2,204 tied agents and 1,461 independent insurance brokers, in addition to selling banc assurance products through the Bank’s network and also by direct selling. The Bank offers various banc assurance products through its insurance brokerage subsidiary NBG Bancassurance S.A. (NBGB) and the Bank’s network in Greece.
International Banking Operations
The Bank’s international banking activities, other than its Turkish operations, include a range of traditional commercial banking services, such as commercial and retail credit, trade financing, foreign exchange and taking of deposits. In addition, the Bank offers shipping finance, investment banking and brokerage services through certain of its foreign branches and subsidiaries. The Bank’s international operations (other than those in Turkey) include the Bank’s branches in Egypt and Cyprus, as well as banking subsidiaries in eight countries. UBB in Bulgaria, Banca Romaneasca in Romania, Stopanska Banka in FYROM, Vojvodjanska in Serbia, NBG Cyprus in Cyprus, NBG Malta Ltd (NBG Malta) in Malta, NBG Albania in Albania and SABA in South Africa, along with other subsidiaries, primarily in the leasing sector. UBB is a commercial bank with headquarters in Sofia, which provides retail and corporate finance services in Bulgaria.
Banca Romaneasca is a commercial bank providing a range of retail, SME and corporate banking services in Romania. Stopanska Banka is a commercial bank that provides a range of retail and corporate banking services. As part of its International operations, the Bank offers leasing services through certain of its foreign subsidiaries. As of December 31, 2014, the Bank had 19 foreign branches in three countries, including one in the United Kingdom, one in Cyprus and 17 in Egypt.
Turkish Banking Operations
The Bank’s banking activities in Turkey through Finansbank and its subsidiaries, include a range of traditional commercial banking services, such as commercial and retail credit, trade financing, foreign exchange and taking of deposits. The Bank operates, as a Group, in 11 countries outside Greece. As of December 31, 2014, its international network comprised 1,218 branches (including foreign subsidiaries and Bank branches in the United Kingdom, Egypt and Cyprus), which offer traditional banking services and financial products and services. The Bank has nine commercial banking subsidiaries in Turkey, Bulgaria, Romania, FYROM, Serbia, Albania, Malta, Cyprus and South Africa. Its Turkish operations include the Finansbank group of companies. Finansbank’s group of companies includes Finans Invest, Finans Leasing, Finans Portfolio Management, Finans Investment Trust, Finans Factoring, IBTech and EFinans.
Finansbank offers a range of retail, commercial, corporate, private banking and international trade finance services. In addition, Finansbank’s subsidiaries provide financial leasing, capital market, corporate finance and portfolio management. As of December 31, 2014, Finansbank operated through a network of 658 branches in 62 commercial centers in Turkey. Finansbank retail banking activities consist primarily of consumer lending, credit and debit card services, mortgages, deposits and investment management and insurance products.
Other
The Other segment Includes real estate management, hotel and warehousing business, as well as unallocated income and expense of the Bank (interest expense of subordinate debt and loans to personnel, among others) and intersegment eliminations. The Bank engages in real estate management activities, including warehousing and third-party property management. As of December 31, 2014, the Bank owned 1,722 real estate units, 1,161 of which were buildings and 448 were lands that the Bank acquired through seizure of collateral on loan foreclosures. The remaining 113 units were acquired to host and to support its business purposes.
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