Tuesday September 23, 2014 Search
Weather | Athens
33o C
20o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Eurobank official proposes better incentives for investors in Greek recap

By George Georgiopoulos

Greece needs to offer sweeter incentives to attract private investors to take part in the recapitalization of its banks and keep the lenders out of state hands, the deputy chief executive of its third-largest lender said.

Battered by the debt crisis, Greece's four big banks are being rescued with 27.5 billion euros in funds, most coming from the European Union and International Monetary Fund.

The banks must also raise part of that figure from the market to avoid being nationalised, but the Eurobank executive said that goal would be tough to achieve, because the terms of the bailout make new investors subsidize past losses.

"At the end of the day banks must stay private, Eurobank Deputy CEO Nick Karamouzis said in an interview. Eurobank is in the midst of a takeover by bigger rival National Bank.

He said the government, EU and IMF lenders and the Hellenic Financial Stability support fund (HFSF) must rethink the entire process.

"We don't need to end up with state banks, he said.

He also lashed out at the tighter monitoring of Greece's banking industry imposed by international lenders, saying it could prove cumbersome. Greek banks are supervised by monitoring trustees who report to EU and IMF lenders, and representatives of the government and bank support fund sit on their boards.

"All interfere in one way or another in the management of banks, a type of bureaucracy that is not conducive to business development. There has to be a rethinking on all this heavy-handed supervision, Karamouzis said.

Foreign lenders have demanded that monitors ensure banks follow best practice. Greek media have also said the supervision aims to sever the ties between banks and the political system and big media organizations, some of which have received loans that might not have been granted under strict banking criteria.

Reuters published several in-depth reports last year on alleged mismanagement at Greek and Cypriot banks including Proton Bank, Piraeus Bank and Marfin Popular Bank, now renamed Cyprus Popular Bank.

Under the recapitalization plan, banks will issue new shares to achieve at least a 6 percent core Tier 1 capital adequacy ratio and issue convertible bonds, or CoCos, to boost that ratio to 9 percent.

The plan requires that private investors must take up at least 10 percent of the new shares for banks to remain private.

Karamouzis said the 7 percent annual coupon that banks will pay to the HFSF on their CoCos is expensive.

That heavy interest burden makes the banks less attractive to investors, who also face the risk their stakes could be diluted if the CoCos are converted to equity, he said.

Furthermore, asking private investors to participate in the share issues at the same terms as the HFSF could prove to be another disincentive, because part of this money will go to covering banks' negative equity, he said.

To resolve this, he suggested having private investors take part at a different price or at a later stage after the negative equity is covered by the support fund.

"I don't think new investors would put up money to cover yesterday's losses. They would be more willing to assume risks that have to do with a bank's future profitability, he said.

On a brighter note, Karamouzis said banks' ability to repo - sell and repurchase - non-Greek securities in international markets was improving, helped by the return of more than 12 billion euros of deposits in the past five to six months.

"Eurobank has repoed more than 2.5 billion euros of non-Greek securities and conducted several billions worth of interbank derivatives trades with foreign counterparty banks, he said.

"These are some first signs of improvement. I am convinced that after banks are recapitalized and as market sentiment improves, access to international capital markets could come at the end of 2013, before Greece (the government) returns to markets, he said.

Greek lenders have relied on central bank funding since losing interbank access because of the crisis.

In the last six months, Eurobank reduced its borrowing from the euro system of central banks by 25 percent, Karamouzis said.

[Reuters]

ekathimerini.com , Tuesday Jan 29, 2013 (12:18)  
Troika visit as scheduled, ministry says
Greek yields hit one-month high as Samaras looks to exit bailout
Construction material costs for new residential buildings decrease
German bond gains push 10-Year yield below 1% on stimulus bets
Greece sees early exit from EU/IMF bailout, PM says
Greece can exit its EU/IMF bailout earlier than expected and can cover its own funding needs next year, Prime Minister Antonis Samaras said in Berlin on Tuesday after meeting German Chancell...
Merkel says first signs of success are visible in Greece
German Chancellor Merkel said on Tuesday that the first positive signs of growth were coming out of Greece and the country was heading in the right direction in the implementation of its bai...
Inside News
SOCCER
PAOK joins Olympiakos on top after win at Agrinio
Olympiakos spent just two nights alone on top of the Super League, as on Monday evening PAOK joined the champions on 10 points through its 1-0 victory at Panetolikos. The Thessaloniki giant ...
SOCCER
Reds beat Veria to claim league lead
Olympiakos thumped hitherto Super League leader Veria 3-0 on Saturday to go alone on top of the table for the first time after four rounds of games. Four days after putting three past Atleti...
Inside Sports
COMMENTARY
A painful curse
It was a curse and a painful one at that. It was a brutal act that brings shame on the person who committed it, on the party which he represents, on the Parliament, on Greece and on everythi...
EDITORIAL
Europes choice
Tuesdays meeting between Greek Prime Minister Antonis Samaras and German Chancellor Angela Merkel in Berlin is of crucial importance. Its hard to deny that Greece has come a long way. The ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. Greece sees early exit from EU/IMF bailout, PM says
2. Merkel says first signs of success are visible in Greece
3. Troika visit as scheduled, ministry says
4. Greek yields hit one-month high as Samaras looks to exit bailout
5. Boutaris shortlisted for world mayor prize
6. Construction material costs for new residential buildings decrease
more news
Today
This Week
1. Trolley bus, metro services to be disrupted Tuesday, Wednesday
2. Venizelos meets American Jewish officials in New York
3. German bond gains push 10-Year yield below 1% on stimulus bets
4. Supreme Court postpones decision on Finance Ministry cleaning staff
5. Construction material costs for new residential buildings decrease
6. Boutaris shortlisted for world mayor prize
Today
This Week
1. Greece at bottom of social justice scale among EU28
2. Greece can meet its needs on its own
3. Central Athens traffic restrictions back in force on Monday
4. Record sum of new debts to the state in August
5. Lost in the fog
6. Alexander the Great's tomb not at Amphipolis, says Culture Minister
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.