HFSF examines plan for banks' swift return to private hands

By Yiannis Papadoyiannis

A large window of opportunity has opened for the faster privatization of the country’s systemic lenders and the state’s immediate recovery of a significant share of the funds placed in sustainable banks thanks to the exceptionally favorable investment mood regarding Greece on the grounds of its imminent economic rebound.

The managements of Alpha, Piraeus and National Bank have already placed the issue of strengthening private ownership at the top of their agendas, requesting more flexible tactics on the immediate use of warrants. Officials at the HFSF bank bailout fund note that its mission is to see the banks restructured before returning them to the private sector, and that the sooner this happens the greater its success will be. The Bank of Greece is also adamant about the significance of returning the lenders to private hands.

Accelerating the privatization of banks will allow for the faster recovery of part of the 25 billion euros the state has placed in the lenders, which combined with the 11-billion-euro reserve held by the HFSF will allow the government greater flexibility.

The country’s expected return to growth has increased the determination of foreign investors to undertake Greek risk, which represents a great opportunity for the immediate privatization of banks. Daily analyses from strong investment companies such as Goldman Sachs, Morgan Stanley, JPMorgan and others underscore the positive prospects of Greece and especially its banking sector as they recommend that their customers purchase shares in local banks.

Bank officials are now working to submit proposals for alternative ways to use the warrants, while the HFSF is studying its options to achieve the fastest sale of its stakes. All alternatives are based on the HFSF issuing public offerings for the acquisition of the warrants. The offering will not involve cash, but the swapping of the warrants with some shares for free, while warrant owners will have the option to relinquish the right to buy the other shares they are entitled to. Banks could therefore return immediately to private hands and not at the end of 2017, as the current warrant status provides for.