CMC acts as rising number of firms go bust

The continuing crisis on the Athens Stock Exchange has been having a negative impact on the finances of listed companies, member and non-member brokerages, and new bankruptcies are threatened every day. Yesterday, the Capital Market Commission (CMC), the market watchdog, decided to suspend the operations of member brokerage Iniochos and place it under liquidation. The Commission appointed an inspector to oversee the liquidation. The decision was made because the CMC found that the company had violated the law on market operations and could no longer finance its operation. Since December, there have been four cases of bankruptcies: first, the non-listed Manos Travel Agency, one of Greece’s largest; the company had accumulated debts of about 18 million euros and has suspended its operations. Listed company Xifias Fisheries has been placed on probation since December. Its creditor, Societe Generale, has taken Xifias to court for its inability to pay back a loan. The hearing, scheduled for yesterday, was postponed till March. Xifias management contends that their credit problems are «transitional» and that the company is salvageable. Listed fashion clothing and accessories importer and distributor Connection was the first to go belly up in 2003, as the company filed for protection from its creditors. The stock ceased to trade on January 31 and creditor banks say that it will be very difficult for the company to pay back its debt, which is in excess of 100 million euros. Worldwide Investments, a company active in the derivatives market, is the latest casualty. The company’s activity has been suspended by CMC and its main shareholders have fled abroad. At the moment, it is estimated that at least five brokerages are in immediate danger, as their capital has shrunk dramatically. Of the 1,100 non-member brokerages – those not allowed to trade directly on the ASE – about 70 percent are idle or have shut down. For the whole of 2002, member brokerages are estimated to have lost more than 25 million euros, and non-members, over 60 million. More than 6,000 employees in brokerages and investment firms were laid off. All the existing investment firms have significant losses in their portfolios and have. Most listed companies have canceled their investment programs and engage in desperate cost-cutting.