From: Nav Gupta <I

From: Nav Gupta <I To: [email protected] Cc: Tazia Smith , Paul Morris , Vinit Sahni , Nav Gupta Subject: Jeffrey - I like Alpha Bank (Greece) listed Call Warrants (ticker ALPHAW GA) to play the Greek story from here Date: Thu, 26 Jun 2014 18:34:09 +0000 Inline-Images: unnamed; unnamed(1); unnamed(2); unnamed(3); unnamed(4) Jeffrey I like the Greek recovery ah ry i like Alpha Bank among the banks there and I think the 3.5yr call warrants issued a year ago which have very little time value priced in and priced close to intrinsic are the best way to buy the stock and the broader story. Background 1. Greece experienced a worse recession than the Eurozone. The wage and unemployment adjustments have been far more severe than the Eurozone. Greece's economy is showing signs of return to growth over the next year. IMF forecasts 0.6% GDP growth 2014 and faster growth than broad Eurozone from 2015+. 2. In the short term bank asset quality continues to deteriorate. NPL is 35, double the rate of Italy and > 3x that of Spain 3. Greek banks raised eur50bn in 2013 to recapitalise losses from Greek Govt bond PSI (private sector involvement). The sector is now 35-70% state owned. Greek Banks Presently Greek banks rank as some of the least profitable in Europe (ROA <0.5%, ROE 2-2.5%). Looking forward to 2018 they should trade at least in line with European banks. Sector consolidation, NC asset disposal, rapidly declining cost of wholesale funds and efficiency savings will all contribute to that. The Sector comprises Alpha Bank, Eurobank, Nat Bk of Greece and Piraeus. The are no longer distressed and trade broadly in-line with European peers in terms of EPS and TBV multiples. 1phallanL(ALEHALA) Of the three, Alpha Bank looks the most interesting. It trades at a discount to the others and has less complex re-structuring. A recent capital raise increased CT1 to 12%. Most analysts prefer Alpha Bank to its peers for these reasons. Alpha Bank Stock Price 200M 100M ■ Last Price 0.69 T High on 10/23/09 4.6085 -9- Average 1.2225... 1 Low on 01/10/12 0.1498 p• Volume 15.089M SMAVG (15) 33.801M • • I PI 2009 2010 2011 2012 2013 I 2014 4.00 3.00 2.00 inn 0.00 15.08911 ALMA Ca Equity (Alpha Bank An Daily 273U N2009-26X112014 Copyright 2014 Bloomberg Finance . 26-3un-2014 14:12:43 EFTA01193784 Ver recent anal st tar• et prices for Al. ha Bank are lar• el above the current price GRAB ALPH.; G. Equity Alpha Bank AE toner-VW EUR Consensus Rating 3.95 Buys 59.1% 13 Holds 27.3% 6 Sells 13.6% 3 12M Tgt Px 17/23 0.84 Last Price 0.69 Return Potential 21.7% LTM Return 80.2% Show In-House Data 95) Actions - 90 Alert 61i 1Y 100. ■ 12MTgtP 114 • Price %Buy r n 11 114441114 SO 0.4 2Y SY Max Analyst Recommend As of 06/26/14 0 • 0.30 P-0.60 0.40 ► k--1 :0.20 0.00 -• -0.50. •Pria- dffste' OK Th e Jun . teii • bee • Hai- • Jun * SeD ' Dec Mai- ... 'Jun 2012 I 2013 2014 Firm Analyst — Recommendation Tgt Px Date I h. Yr Rtn BARR Walikr- 1) 1 Wood & Company Alexandros Bouloug buy 0.90 06/20/14 2)® Euroxx Securities Maria Kanellopoulo overweight 0.90 06/19/14 15.00% 1st 1st k 3) Alpha Finance Nikolaos Lianeris restricted 06/17/14 4) Natixis Alex Koagne • reduce 0.75 06/16/14 5) Pantelakis Securities Paris Mantzavras overweight 0.90 06/13/14 6) Nomura Daragh Quinn buy 0.75 06/12/14 0.20% 2nd 7) Credit Suisse Hugo Swann • neutral 0.80 06/11/14 8) *Barclays Kiri Vijayarajah • overweight 0.92 06/10/14 L 9) • Goldman Sachs Pawel Dziedzic Buy/Neutral 0.80 06/06/14 10) HSBC Tamer Sengun * overweight 0.87 06/06/14 11) 1 IBG Research (ESN) Konstantinos Manol buy 1.10 06/06/14 12) Deutsche Bank Rahul Shah * buy 0.90 06/04/14 Australia 61 2 9777 8600 Brazil 5511 3048 4500 Europe 44 20 7330 7500 Germany 49 69 9204 1210 Hong Kong 852 2977 6000 Japan 81 3 3201 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2014 Bloomberg Finance SN 622439 H622-433-3 26-Jun-14 14.11:47 BST GMT+1:00 Warrants A year ago the bank issued 4.5year call warrants, exercisable every six months into the stock at a price schedule (appendix A) that varies over time the relationship between the warrant (which settles physically) and the stock price is: [current stock price (0.69) - next exercise price of warrant (0.4686)] x leverage ratio 7.408 = intrinsic warrant px = 1.64. Now, the warrant is offered at 1.83. The value here is that the difference between 1.83 and 1.64, in my view, doesnt compensate for the optionality you get holding the warrant compared to just holding the stock. Warrant price EFTA01193785 • Last Price 1 1.83 T High on 06/10/14'2.10 -9- Average 1 3141 I Low on 07/11/13 0.625 940 • Volume 0.245M L • SMAVG (15) 2.397M Mill ....lre4eAti.;4..,...............is e w.litini;;;Ioreakke......-..billlkomaarerhininaii-a-ta......."---.......:.. Sep Dec Mar 2013 I 2014 ALPHAW GA Equity (Alpha Bank AE) Daily 26JUN2013-26JUN2014 Copyright@ 2014 Bloomberg Finance . 26-Jun-2014 14:22:20 1.60 1.40 1.20 1.00 0.80 0.60 Were the stock to rise 10% over the next month the warrant would rise in value from 1.83 by approx 22%. Conversely if the stock were to fall the warrants would also fall - but its unlikely the warrant price trades at zero anytime soon due to the 3.5years of remaining time value. The warrants are quoted several thousand up I tick wide on exchange. My qns shout. appendix A WARRANT ENTITLES HOLDER TO ACQUIRE NEW COMMON SHARES HELD BY HFSF AT A RATIO OF 7.408683070. ISSUE AMOUNT: 1,233,503,482. STEP-UP STRIKE:0.4488 12/10/2013, 0.4576 06/10/2014, 0.4686 12/10/2014, 0.4796 06/10/2014, 0.4928 12/10/2015, 0.506 06/10/2016, 0.5214 12/10/2016, 0.5368 06/10/2017, 0.554412/10/2017 Nay Nay Gupta Managing Director Deutsche Bank AG. Fiiale London Deutsche Asset & Wealth Mana ement Tel. Mobile Email Any proposed ideas are being delivered to you by the DeAWM Key Client Partners (*KCP") London desk for discussion purposes only. and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DE"). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. 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