* NBG plans 2-for-9 rights issue at 11.3 euros a share
* Credit Suisse, Goldman Sachs are joint global coordinators
* NBG wants to pre-empt possible capital boosts in sector
* Shares down nearly 10 percent
(Adds CEO, CFO comments paragraphs 3-5, 6-7)
By George Georgiopoulos
ATHENS, June 16 (Reuters) - Greece's largest lender, National Bank, said it would propose a capital-boosting rights issue of up to 1.25 billion euros ($1.74 billion) at its June 18 board meeting, sending its shares sharply lower.
NBG shares fell 10 percent to 18.44 euros on Tuesday's announcement, with analysts citing the rights issue price and resultant share dilution. The bank plans to issue two new shares for every nine held, at a price of 11.3 euros each.
Chief Executive Takis Arapoglou told an analyst conference call that the cash call was not due to a business downturn, but was a preemptive move given "banking sector dynamics in Europe", as European peers also look to raise fresh funds.
"The rights offering is not reflective in any way of any deterioration in our business. It is not needed to strengthen our provision buffer," Arapoglou said.
"(The offering) provides us with a high degree of strategic flexibility and is a prudent response to global conditions in the event green shoots wilt in the summer sun," he said.
NBG's cash arsenal will allow the group to take advantage of growth opportunities as part of a wider strategy to strengthen its presence in southeast Europe. The bank has operations in Bulgaria, Serbia, Romania, Albania, Cyprus, Egypt and Turkey.
Arapoglou told analysts NBG had no intention to exit southeast Europe. Any moves on the acqusisitions front "would not be transformatory", and nothing was imminent.
"Greece clearly is not within our scope of acquisitions," CFO Anthimos Thomopoulos said.
REGULATOR'S DELIGHT
Greek central bank chief George Provopoulos welcomed the rights issue. "National Bank's share capital increase is a positive move in this environment," Provopoulos told reporters at the sidelines of a press conference on climate change in Athens.
"It's a regulator's delight to see banks boosting their capital," he added.
Asked by reporters whether the rights issue would better position NBG for buyouts, Provopoulos said: "It obviously has a comparative advantage to make acquisitions. I'm not saying that anything like that will happen."
Investors were more sceptical, analysts said.
"The share dilution and the lower rights issue price are the reason behind the share's drop today," said analyst Constantinos Manolopoulos at Marfin Analysis.
The shares immediately shed 8 percent of their value and were trading 9.3 percent down at 1325 GMT, compared with losses of about 3.9 percent for the Athens general index. They are up 39 percent year-to-date.
The company's stock trades about 9.5 times estimated 2009 earnings compared with a P/E ratio of about 14 for the pan-European FTSE banking sector.
Credit Suisse and Goldman Sachs will be the joint global coordinators with JP Morgan and Morgan Stanley the joint bookrunners, should there be shares unsubscribed.
NBG will issue 110.4 million new shares each with a par value of 5 euros. The shares will trade ex-rights July 1.
The bank is taking part in the Greek government's 28 billion euros support scheme to keep Greece's economy adequately funded. The lender already received a capital boost of 350 million euros by selling the government preferred shares.
($1=.7197 euros) (Editing by Simon Jessop)