• Commerzbank, ABN Amro, BNP Paribas, NatWest and CaixaBank on investors’ radar, but not all are likely
• Stocks’ enticing traditng multiples support ‘buy’ sentiment

A EUR 1.1bn sell-down in Greece’s Greek National Bank [ATH:ETE] by the country’s Hellenic Financial Stability Fund has been cheered by  investors, as European states speed up sales of financial institutions rescued during the financial crisis. But political variance across Europe means bank equity stories aren’t always straightforward.

The NBG block was sold through a rare fully marketed sale, a process which was warmly welcomed by investors given the increased transparency, said a banker close to the deal.

The Greek government’s transparency has been compared with the approach of Ireland’s Department of Finance when selling a EUR 514.83m block in AIB Group [DUB:A5G] last week.

“These were textbook deals from Greece, as well as Ireland, both published a strategy and in the case of Greece they did a non-deal roadshow, allowed us to do a sensible wall-cross and had the upsize option,” said an ECM banker close to the NBG deal, adding that “there was clear dialogue throughout.”

The banker added that the fully marketed nature of the NBG sell-down was helpful for institutional investors and many of the larger hedge funds that invest on a long-only basis, as it allowed for more time for analyst work to be done, not normally the case with accelerated transactions.

The NBG deal had around 170 lines in the book, with strong support from existing shareholders and international institutional investors. Around 80% went to international and the top 20 took 60% of the deal.

Capital Group, Fidelity Management and Research, BlackRock and Vanguard are some of the NBG’s top shareholders apart from the Greek state, according to Dealogic Institutional Analytics.

The Hellenic Financial Stability Fund is prevented from selling any more shares in NBG under a lock-up agreement which expires on 19 May 2024. It retains around an 18% stake following the sell-down.

HFSF did not respond to requests for comment on the deal.

Political roadblocks

Greece and Ireland’s bank sell-downs are just two of the legacy bank holdings that investors are eyeing for privatisation, particularly now as financial institution equity is back in vogue.

Germany retains an over 15% stake in Commerzbank [ETR:CBK] which investors would be keen to take on, several bank sources said. Alongside that, the Dutch government retains a 49.5% slice of ABN Amro [AMS:ABN], the Belgian state a 5.3% stake in BNP Paribas [EPA:BNPP] and the UK and Spanish governments hold equity positions of around 37% in NatWest [LON:NWG] and 17.3% in CaixaBank [BME:CABK] respectively.

Not all have easy sell-down options ahead, though.

NatWest is still on the hunt for a permanent CEO, following the resignation of Dame Alison Rose in July due to a scandal involving its private banking subsidiary Coutts and UK populist politician Nigel Farage.

The bank’s stock is down 23.6% over the past six months, bucking the trend of rising European bank stocks alongside higher interest rates.

The dynamics around Caixa are also complicated. A second and third ECM banker said that a Spanish bank sell-down is an obvious deal given the stock’s performance, but lack of clarity on the political scene after Spain’s last election has complicated any privatisation talk.

A source familiar with the situation said that there were two main reasons holding up any sell-down. Firstly, a privatisation could mean Spain’s governing socialists picking a fight with Sumar, the hard-left junior partner in Spain’s coalition government which publicly favours the creation of a national bank.

Secondly Catalan political parties, on which the government depends, want the government to use its holding in the bank to persuade it to move its headquarters back to Barcelona, the source said; CaixaBank moved it HQ to Valencia after the 2017 Catalan referendum to split from Spain.

“On the face of it, non-European investors may think they are just buying European bank risk but then when you consider the politics, it genuinely astounds some investors, particularly in the US,” said one of the bankers.

CaixaBank declined to comment. The Spanish Executive Resolution Authority (FROB) did not respond to requests for comment.

A loud ‘buy’

It is clear from the demand for both the AIB and NIB trades that bank equity is likely to remain a theme in Europe’s equity capital markets, especially with rates likely to stay high for some time.

“There is a lot of interest among sponsor clients and governments to do a deal,” said a fourth ECM banker. “With the right window before the holidays, other ABBs could be issued; I would not be surprised if some came in the next one to two weeks.”

The second ECM banker noted that bank equity stories that were simple to understand and often concentrated on a single country, like AIB and NGB, remained favoured over more complex continental banking stories.

“Obviously it depends on country, even Ireland and the UK for example have very different dynamics, but some of these banks are still screamingly cheap so there is good appetite on our side,” said an ECM investor.

Banks’ door are open.

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