Capital calls: The relaunch of the Greek banks is based on the same old fuel source

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The Greek national flag flutters in Athens, Greece on April 28, 2020.

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GALAXY BRAIN. The CEO of Alpha Bank (ACBr.AT), Vassilios Psaltis, announced on Monday plans to raise 800 million euros in “growth capital” as part of his strategy in order to achieve a return of 10% on material equity (ROTE) by 2024. Investors nudged the lender’s stock up a tenth and reversed some of the losses on Friday, but they’re still skeptical. If the goals of Psaltis were achievable, the market value of Alpha in 2024 should roughly correspond to the projected material book value of 6.7 billion euros. With today’s discount rate of 10%, that’s 5 billion euros. However, the lender is worth less than a third of that amount.

One explanation is that Psaltis’ sales targets look punchy. They estimate that cash from the EU recovery fund will effectively double growth in Greek business credit by 2024. Another reason to be cautious is that most of Alpha’s hoped-for ROTE surge is due to continued bad debt cleanup. In other words, Psaltis’ “Project Tomorrow” plan has an eerie sound to it from yesterday. Read more. (By Liam Proud)

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