Emporiki set to pay CA over 130 mln

French bought stake risk-free

As more details have emerged of the secret deal signed five years ago between Emporiki Bank and Credit Agricole, legal sources said yesterday that this might turn into one of the biggest cases of investor defrauding in the continuing saga of the 1999-2000 stock market bubble.

The secret deal, which will allow the French investors to at least recoup their investment if they sell their stock within the next two years, was revealed in Emporiki's own prospectus relative to its capital increase.

Credit Agricole bought a 6.5 percent stake in Emporiki in 2000, paying 43 euros per share. The market slump had already begun by then, not stopping until end-March 2003. Despite the subsequent recovery, and with the ASE general index having reached its early December 2000 level, Emporiki's shares are way below that price, having closed at 24.46 euros yesterday.

A clause in the agreement, however, calls for Emporiki to either buy back the shares at the same price or recompense Credit Agricole for the price difference should it sell to other investors. If Emporiki's share price remains at current levels and Credit Agricole decides to sell, this will mean a burden of over 130 million euros in the bank's financial results.

When it announced Credit Agricole's investment, the then socialist government had trumpeted it as a huge success which showcased the strengths of the Greek economy. The French were less enthusiastic, but they were the ones to gain. Besides the risk-free investment, they have earned about 30 million euros in dividends.

Subsequently, Credit Agricole has raised its stake to about 11 percent, with an option to buy the state's remaining 10 percent stake and, eventually, undertake Emporiki's management.

The French had already indicated they wanted out earlier this year, ostensibly due to the bank's financial difficulties with its employees' auxiliary pension fund. Now that the terms of the deal have been disclosed, their rationale for selling is more obvious.