Banks: Eurosystem funding lower by EUR 8.7bn m/m at the end of December

 Amidst negative sentiment in international bourses, the Greek market traded in the red throughout yesterday’s session, with the general index shedding 2.7%. The banking sector underperformed, closing 11.1% lower. Transaction activity remained close to the year-to-date average, at EUR85.7mn. The four systemic banks recorded the highest declines among large caps (Piraeus -11.7%, Eurobank -11.4%, National Bank -10.4% and Alpha Bank -9.2%) while PPC (-6.2%), Hellenic Exchanges (-4.0%) and Terna Energy (-3.5%) underperformed among non-financials. On the other hand, Coca-Cola Hellenic (+1.6%), Jumbo (+1.0%), Ellaktor (+0.8%) and Titan (+0.8%) recorded gains. We expect that the market may attempt to recover some of yesterday’s losses today, assuming that sentiment in international markets remains supportive.

 Banks // Eurosystem funding lower by EUR 8.7bn m/m at the end of December

According to Bank of Greece data, Greek banks’ reliance on Eurosystem funding was lower m/m at the end of December by EUR 8.7bn at EUR 107.5bn. ELA funding was lower by EUR 8.6bn standing at EUR 68.9bn, while direct ECB funding was broadly unchanged at EUR 38.6bn. The aforementioned trends were mainly the result of recap funds that were injected in late November/early December to Greek systemic banks, while they may also imply a positive trend in deposits during the same month. We expect Eurosystem funding to decline further in the months to come albeit at a slower pace compared to December.

National Bank // Shareholders approve the sale of Finansbank

The group’s shareholders approved yesterday the sale of Finansbank, based on the agreement announced by the bank at the end of December. Management highlighted that post the sale of Finansbank, NBG will have the best liquidity and capital position among Greek banks enabling them to support the Greek economy. Management aims to repay CoCos and pillar II bonds and further reduce expensive ELA funding. Finally, NBG’s Chairwoman outlined the three key priorities of the group, namely i) focus on financing new projects, ii) improvement of corporate governance, iii) re-building of trust with corporate and individual clients.

Piraeus Bank // To appoint an interim CEO

The group announced yesterday that it will appoint an interim CEO on Wednesday until the appointment by the BoD of the new CEO that will head PB to implement its business plan and medium term targets. In addition Piraeus Bank announced that it has hired EgonZehnder to assist their efforts in selecting a new CEO, while the search will take place in Greece and abroad in order to find suitable candidates.

OTE // Govt commits to transfer the state’s stake in OTE to the Privatization agency

The report on Greece’s compliance with the second set of milestones – leaked to the local press yesterday – reveals that the govt has committed to transfer the state’s stake in OTE to the Privatization agency (HRADF). The transfer will be done before the completion of the first program review. The exact percentage of shares that will be transferred to HRADF is yet to be decided. As a reminder, Hellenic Republic holds 6% of the share capital with another 4% belonging to the state pension fund. The disposal of the Greek state’s remaining stake in OTE returned on the agenda after the signing of the 3rd ESM program in August 2015, with the govt including OTE in the assets to be privatized. As a result, the news comes as no surprise.

Hellenic Petroleum // Press reports on company executives meeting with Iran officials

A Reuters press report indicated yesterday that company executives will meet with Iran officials on Friday to discuss the scope of taking delivery of Iran oil following the lifting of the international sanctions on Iran. We remind that up until the sanctions were put in place in 2012, Hellenic Petroleum purchased almost a third of its crude slate from Iran making Greece for that matter one of the oil exporting country’s largest clients. The lifting of sanctions will also require that the unpaid obligations in the ELPE payables account to NIOC be cleared, which has been aired in the press to range between USD 500-800mn. All in all, we expect this to be a positive development for the refiners operations from a margins perspective as its configuration (especially the Elefsina facility) is particularly geared to Iranian oil, as previously stated by management, but we will also focus on the terms under which the past obligation is cleared or dealt with.

Mytilineos // Greek Competition Commission addresses Aluminium of Greece – PPC dispute

The Hellenic Competition Commission (HCC) issued a press release yesterday informing that it has accepted commitments proposed by PPC so as to meet the preliminary competition concerns expressed by the HCC with regard to the supply of electricity to Aluminium of Greece. We remind that the investigation was initiated following a complaint by Aluminium and its parent group Mytilineos for alleged abuse of dominance by PPC. The complainants alleged that PPC refused to supply Aluminium and imposed on the latter unfair and discriminatory trading conditions. As per HCC, PPC commits to: (a) immediately withdraw its request to ADMIE to no longer represent Aluminium’s meters and revoke the declaration of discontinuation of power supply to Aluminium and the termination of their commercial relationship; (b) continue to supply Aluminium on current terms and conditions; (c) conduct negotiations with Aluminium and conclude to a new supply agreement within 3 months and (d) abstain from similar actions until the conclusion of the negotiations/resolution of the dispute provided that Aluminium continues to pay the fees it currently pays.  This seems to be yet another ruling in favour of Aluminium. It is our understanding that based on the aforementioned decision, Aluminium will be charged with the price set by the Permanent Arbitration Tribunal which was completed in 2013, until a new supply agreement is in place. We remind that based on the Arbitration tribunal (effective until Dec ‘13), due to its special consumer specifications (size and stability of consumption), Aluminium was to be supplied with the cheapest lignite-fired generation; the Arbitration had set a price of EUR40.7 per MWh which included fixed and variable costs of energy and charges for the transmission system use.

OPAP // Horse race betting activities to kick off on Friday

According to euro2day.gr, OPAP will formally launch its horse racing operations on Friday. Meanwhile, since yesterday OPAP offers punters the chance to bet into a common pool on international horse races (France, UK, S. Africa). We have not yet incorporated any contribution from horse racing in our OPAP group numbers. Organized by the state until last year, Greek horse racing generated wagers of just EUR50m in 2014 translating to GGR of cEUR11mn.