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JP Morgan Reduced Piraeus Bank Price-Target To 0.3 From 3.9

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JP Morgan reduced the price target of Piraeus Bank to €0.3 from €3.9, according to a report. 

The firm calculates a minimum of €1.2bn (vs. current mkt. cap of €430mn) core capital would be needed within 12 months to reach T1 capital at 10%.

It estimates €1.9bn of capital would be needed to bring T1 capital at 10%, in case of further haircut of 20% on the newly exchanged GGB coupons and 40% haircut on non PSI-eligible Greek government bonds. 

The capital requirement could be partially addressed via further reduction of risk weighted assets and/or additional asset sales, said JP Morgan.

Additionally, the firm reduces forecast, expecting losses in 2011-13, while investment case remains challenging.

JP Morgan factors a resolution of the current sovereign crisis in the next 12-24 months, which could trigger gradual reopening of funding markets. Piraeus has currently €18.6bn (33% assets) of ECB funding, which is unlikely to be replaced in the near term.

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