The agency of ‘rating’ DBRS considers the announced capital increase of BCP an “important step” and you expect the bank led by Nuno Amado to return to profit in 2017, in spite of the problems that persist.
“The announcement removes uncertainty around the prospects of BCP to 2017, largely associated with the ability to pay the obligations of contingent capital (CoCos) after the bank reported losses in the first nine months of 2016, and taking into account the fragility of the capital position,” said the credit rating agency financial source of the canadian, in a note to the market.
THE BCP announced on Monday a capital increase of 1.33 billion euros, part of whose revenue will be used to repay the 700 million euros in ‘Cocos’ which have to be paid until June of this year, and the remainder shall serve to leave the institution with capital ratios comfortable.
it is Already known that the shareholder, the chinese Fosun wants to take advantage to stay with 30% of the BCP, compared to a 16.7% holding, while the angolan Sonangol also has authorization to increase its share in the capital of the bank to approximately 30%, but do not know if they will exercise this option.
According to DBRS, the BCP wants to increase its capital ratios (solvency indicators) to be in line with their european peers and pay the 'Coconuts’, being free to distribute dividends to its shareholders, when you get back in profits.
The agency of ‘rating’ considers that this capital increase shows the commitment of the bank to “strengthen its balance sheet, strengthen its capital position and increase transparency for investors”.
Although I consider it a positive of the transaction, DBRS continues to see weaknesses in the BCP, in particular due to operation in Portugal.
“Although he believes the strengthening of the capital along with the repayment of the 'Coconuts’ as an important step to improve the overall financial stability of the bank, the BCP continues to generate losses as a result of the activities of the operations in Portugal”, it reads in the note to the market.
THE BCP presented losses of 251,1 million euros until September 2016, affected by significant provisions for troubled loans, some of which were carried out to strengthen levels of coverage.
THE DBRS shows-mainly concerned with the troubled assets in Portugal, but it is expected that this year the bank’s present profits, taking into account the improvement of profitability with the reduction of inputs of non-performing loans, the normalization of the generation of provisions (impairment for potential losses), and the reduction of financing costs, though they must continue above that of its european peers.
“The full reimbursement of the 'Coconuts’ should have a positive impact on the financial margin of around 65 million euros a year,” estimates the agency of 'rating’.
This capital increase will count with a consortium of international banks that guarantee the operation, led by Goldman Sachs International and J. P. Morgan Securities, and that account is still with Credit Suisse Securities, Mediobanca and Merrill Lynch International, being the subscription price of the offer fixed to 9.4 cents per share.
Upon successful completion of this offering and the full repayment of the ‘Coconuts’, the ratio of ‘common equity tier 1′ (CET1) of the BCP, according to the full implementation of the new european rules, will be on 11,4% (in reference to 30 September 2016).
THE DBRS expects that the capital increase is completed within a month.
the actions of The BCP have been pressed since the announcement of the capital increase following today, by 14:00, lost 0,65% 0,84 euros on the Lisbon stock exchange.
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