Troika tells Greek lenders to stick to local banking
Representatives of Greece’s creditors and the competition branch of the European Commission are asking domestic commercial banks to sell off their non-banking activities in Greece and their subsidiary and affiliated banks in Southeastern Europe.
Sources say that the troika – the Commission, European Central Bank and International Monetary Fund – are demanding the immediate sale of non-banking business on a specific timetable, while exercising pressure for the sale of subsidiaries in the Balkans.
The Commission’s deputy director-general for state aid, Gert Jan Koopman has been in Athens for the past few days holding a series of meetings with Greek bank managers regarding the business plans that lenders will have to submit in the context of their recapitalization.
According to sources, Koopman described to the managers the framework to which business plans will have to adhere, while next week the Competition Directorate-General will reportedly send written instructions to local lenders concerning their business plans. Bank officials say that the credit institutions will have to submit their plans by the end of June and then, following consultation, final plans will be agreed by mid-July.
One sticking point is the fate of subsidiaries and affiliates in the Balkans. The troika wants to see a drastic cut in the presence of domestic banks in countries in the region. It believes that given their weak capital base and the huge pressure they are under from the recession in Greece, having a strong regional presence is a luxury they can no longer afford.
The banks argue that it would constitute a major strategic error if they sold their subsidiaries in Southeastern Europe, particularly at this difficult time. They admit that adjustments and possibly some sales will have to take place, but stress that retaining a presence in the region is crucial not just to their own future survival but also to that of the Greek economy in general.
