The government is increasing its holding in National Bank, either directly or indirectly via state portfolio management company DEKA, for the twin objectives of raising revenues and finding a strategic partner for the bank. By the summer of 2003, the State is expected to control a stake of 22-25 percent in National Bank from the 14.17 percent it directly controls today. This includes DEKA’s current holding of 5.37 percent, the 1.3 percent directly held by the State, the 5.5 percent presently owned by the Post Office Savings Bank and which is due to be transferred to the State, and some 2 percent held by the Loans and Deposits Fund. In July 2003, the third installment of a bond convertible into National Bank equity, which was issued in 1999 and is currently held by DEKA, will expire. Assuming that bondholders will cash in on their titles, DEKA will acquire 6,461,096 shares. The State also holds 14,560,681 shares, a part of which came from the distribution of four new shares for every 10 held in April 2000. The convertible bond is equivalent to a 9.2-percent stake in National Bank. This, together with the direct stake of 14.17 percent, means the State will have control over a total of 23.37 percent in the bank by next July. The size of the package means the State can easily exploit its asset even during difficult stock market conditions. The first indication of the government’s intentions was made clear by Economy and Finance Minister Nikos Christodoulakis at this year’s Union of Greek Banks’ annual general meeting. Many thought then he was referring to the 5.5-percent stake in National Bank held by the Post Office Savings Bank. In reality, it is far more than the ‘small package’ held by the savings bank. National Bank officials thus have every reason to be interested in the fate of the 23-percent stake and how it will be exploited. For this reason, governor Theodoros Karadzas and his deputy Apostolos Tamvakakis, who deals with the issue, have stressed repeatedly that whatever decision is taken, it should not impact negatively on its stock and that it should serve the interests of the bank and its stockholders. The truth is, National Bank continues to provide a good dowry to the State – its blue chips on the Athens Stock Exchange are a lifesaver as far as the State is concerned. An example is the sale of a second tranche of shares in electricity utility Public Power Corporation this year. In the past, the sale of equity in telecoms operator OTE and oil refiner Hellenic Petroleum, together with bonds convertible into National Bank and Agricultural Bank shares, had played a similar role. National Bank apart, the government is due to increase its holding in Commercial Bank when the Post Office Savings Bank transfers its 9.9-percent stake to the State even though this stock is destined for Credit Agricole. There are many ways by which the State can make use of its National Bank stake. The simplest for Christodoulakis would be to renew the convertible bonds. Sources said a solution which combines both equity and strategic elements and which has the bank’s agreement would strengthen the bank’s presence both locally and internationally and simultaneously enrich the State coffers substantially.