Two Greek banks dropped from top European equity index

Greek lenders Bank of Piraeus and Eurobank will drop out of the pan-European STOXX 600 benchmark, index compiler STOXX said, potentially depriving them of investment flows at a rocky time for Greek’s economic future.

Despite a recent rebound, shares in the two banks are down around 65 percent since February 2014, hurt by worries over Greece’s debt pile.

The demotion from the benchmark index means the shares will be dropped from exchange-traded funds (ETFs) and index trackers replicating the STOXX 600, resulting in a fall in liquidity for the stocks.

According to Societe Generale analysts, the deletion would mean ETFs and funds having to adjust to the change would sell 10.1 million Piraeus shares worth around 6.2 million euros ($7.1 million), and 47.5 million Eurobank shares worth 7.1 million euros.

Piraeus shares were down 6.6 percent and Eurobank down 4 percent on Wednesday morning, giving up a portion of gains made on Tuesday after Athens delivered a list of economic reforms to the euro zone that helped it secure a four-month extension of its financial rescue.

The two banks have a market value of 4.2 billion euros and 2.5 billion euros, respectively.

Bigger rivals National Bank of Greece and Alpha Bank will remain in the STOXX 600.

The index provider, which uses criteria such as market capitalization and free float to rank stocks, said Rhoen Klinikum, Premier Oil, Ophir Energy, Hunting and Nutreco will also be dropped from the STOXX 600.

AMS, Faurecia, WH Smith, Beazley, Duerr, Restaurant GRP and Grafton will be added to the index.

Changes will be effective as of the open of markets on March 23. [Reuters]