Rift between Eurobank and HFSF over share increase

Process put off upon the fund’s demand to wait for the new bill By Yiannis Papadoyiannis

The process to return state-controlled Eurobank to the private sector appears set to be a long one after the bank on Thursday postponed its decision to go ahead with a share capital increase upon the demand of its main shareholder, the Hellenic Financial Stability Fund (HFSF), on Wednesday.

Meeting in a tense atmosphere due to its clash with the HFSF, the Eurobank board officially announced it had put off the decision for the increase that it had hoped would cover its capital requirements of 2.945 billion euros from the private sector.

The HFSF reacted strongly against Eurobank’s plan to have its capital needs covered by the private sector as that would entail a significant reduction of its own holding, thereby hurting its interests. “The HFSF is in close cooperation with the bank’s administration for the completion of its restructuring plan that will cover all sectors for the further saving of funds by way of financial and operation measures,” stated HFSF Managing Director Anastasia Sakellariou on Thursday. The fund today controls 95 percent of Eurobank.

Sources say that Eurobank officials estimate that the coverage of the increase exclusively by the private sector would enhance the value of the bank and therefore its shareholders’ holdings. Addressing a conference on Thursday, the group’s chief financial officer, Gikas Hardouvelis, said that investors had already been found to cover the increase, but the new delay and the concerns over the reduction of the HFSF holding mean that it cannot move forward for now.

Last night the two sides sought to contain the rift, insisting that the increase will proceed normally once the new bill regarding the banking sector is tabled and voted on.

Eurobank sources noted that Thursday’s postponement does not concern the increase itself but the date when the general meeting will take place. They added that the submission of the necessary bill to Parliament is only a matter of days.