Avoid National Bank of Greece After Reverse Split

National Bank of Greece (NBG) implemented a reverse split on its ADR in the ratio of 1:5 effective November 25, 2011.

From the announcement released by BNY Mellon:

National Bank of Greece has announced a change in the current ratio on its existing ADR program. The current ratio will change from five (5) ADSs representing one (1) Ordinary Share (5:1) to one (1) ADS representing one (1) Ordinary Share (1:1).

To effect the ratio change, a reverse split on the National Bank of Greece DRs on a basis of one (1) new ADS for every five (5) old ADSs will occur.

From a peak of over $14 in November 2007, NBG closed at $0.43 on Friday. From Monday the stock will start trading at the reverse adjusted price.

Though National Bank of Greece is the oldest and largest among Greek banks, it is better to avoid investing in the stock now. Greece has been bailed out twice in recent years and fundamental economic changes have to occur before the country becomes a desirable investment destination. The country is the poorest in Europe and despite being the birthplace of modern democracy, Greece suffers from many social ills such as corruption at all levels, tax evasion, high public sector employment, lowest retirement age, etc.

National Bank of Greece follows Bank of Ireland (IRE) which implemented a reverse split on its ADR last month. More European banks may effect reverse splits as their shares are currently languishing in the single digits and may fall below the $1 mark if the crisis worsens further.

Disclosure: No Positions

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