EFTA02584996.pdf

From: jeffrey E. <jeevacation@gmail.com> Sent: Thursday, June 26, 2014 7:10 PM To: Nav Gupta Subject: Re: Jeffrey - I like Alpha Bank (Greece) listed Call Warrants (ticker ALPHAW GA) to play the Greek story from here size? On Thu, Jun 26, 2014 at 2:34 PM, Nav Gupta < <mailto » wrote: Jeffrey I like the Greek recovery story, 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 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, rapid=y declining cost of wholesale funds and efficiency savings will all contribut= 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 Europe=n peers in terms of EPS and TBV multiples. Alpha Bank (ALPHA GA) Of the three, Alpha Bank looks the most interesting. It trades at a discoun= 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 Very recent analyst target prices for Alpha Bank are largely above the current price 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 EFTA_R1_01764207 EFTA02584996  the relationship between the warrant (which settles ph=sically) and the stock price is: [current stock price (0.69) - next exercise price of w=rrant (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 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 1tick wide on exchange.<=ont face="sans-serif"> Any qns shout.=br> Appendix A OF 7.408683070 <tel: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,=/font> 0.506 06/10/2016, 0.5214 12/10/2016, 0.5368 06/10/2017, 0.5544 12/10/20174=ont> Nav Nav Gupta Managing Director Deutsche Bank AG, Filiale London Deutsche Asset & Wealth Management 105/108 Old Broad St (Pinners Hall), EC2N lEN London, United Kingdom Tel. <tel Mobile <tel Email <mailto Any proposed ideas are being delivered to you by the DeAWM Key Client Partn=rs ("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 ("DB"). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID), who understand the strategy, characteristi=s and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution. 2 EFTA_R1_01764208 EFTA02584997  This e-mail may contain confidential and/or privileged information. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and delete this e-mail. Any unauthoriz=d copying, disclosure or distribution of the material in this e-mail is stric=ly forbidden. Please refer to http://www.db.com/en/co=tent/eu_disclosures.htm chttp://www.db.com/en/content/eu_disclosur.s.htm> for additional EU corporate and regulatory disclosures and to http://www.db.com/unitedkingdom/content/privacy.=tm for information about privacy. This e-mail may contain confidential and/or privileged information. 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