ECONOMY

Gov?t tightens grip on banks

The government will widen its powers over lenders which are receiving on state support to include veto rights over mergers and acquisitions, according to a draft law.

The move comes in exchange for a new batch of government guarantees worth 30 billion euros to help Greek lenders secure funding.

“[The bill] extends the powers of the government representative to board decisions concerning the lenders’ legal or financial status, such as mergers and acquisitions,» the Finance Ministry said in a statement.

The law also gives the government full access to the bank’s economic data, including restructuring and financing plans.

Since 2008, Greece’s banks, including its six biggest lenders, have benefited from a series of support packages provided by the Greek government. That aid has been mainly aimed at boosting the banks’ available liquidity along with the help of special European Central Bank liquidity measures.

However, as a condition for receiving that aid, the banks have been required to issue interest-bearing preference shares to the Greek state, and place a government-appointed representative on their board of directors whose previous veto powers were limited to the banks’ dividend and compensation policies.