Venizelos: No one exempt from BlackRock audit

Finance Minister Evangelos Venizelos recently warned that any untoward findings in the BlackRock Solutions audits of Greek banks? portfolios will be investigated judicially, while adding the no banks will be exempt from the audit, which will also include a probe into loans issued to offshore companies that have ties with banks.

The audit is being carried out by the American investment management firm within the framework of a diagnostic study.

Speaking to Parliament?s Economic Affairs Committee, Venizelos noted: ?In the five months that I have been in charge of the Ministry of Finance, we have seen a number of problems emerge in regard to the banking system. These problems were not created now, but they emerged now, and they are under investigation by judicial, civic, administrative and banking authorities. This will be across the board and of course within the context of BlackRock?s investigation, because it is one thing to have embezzled or be charged with embezzlement, and quite another to have committed discrepancies in the issuance of loans.?

The minister added that ?we are completely strict on this point, and there will be no discounts or diversions.?

As far as offshore companies are concerned, Venizelos stressed that there are no exceptions in BlackRock?s probe of banks? portfolios.

?The Bank of Greece has issued no directives concerning exemptions from BlackRock?s audit of offshore companies that are in any way connected to the banking system,? Venizelos said.

For its part, BoG said in its midterm report that BlackRock?s diagnostic study is being carried out within the context of Greece?s commitments toward its international creditors, while adding that a similar study was completed in Ireland in March 2011 and another began just recently in Portugal.

According to BoG, ?a clarification of where things stand and the immediate collection of the additional capital can only have a positive impact and it is likely that this will help banks return to the markets sooner.? As far as the immediate challenges to the domestic banking sector are concerned, the BoG report said these concern liquidity risks and the need for recapitalization.

On the latter issue, Venizelos said that if this is done through the European Financial Stability Facility, it will be done by issuing common shares. The finance minister also noted that the total sum of the privileged shares already issued as part of the program boosting the economy?s liquidity exceeds the overall fiscal value of Greek banks.

He did not, however, exclude the possibility that the recapitalization would be carried out through issuing privileged shares: ?In theory, if the recapitalization of Greek banks could be achieved without this affecting the Greek public debt, if it could be done directly via a financial organization such as the European Financial Stability Facility, without the involvement of the Greek state, then the creditors who take part in the recapitalization would be able to arrange on their own the way in which they would participate in the share capital of that credit institution,? the minister stated, adding that the state will therefore need to act in a way that would safeguard its interests and those of the citizens by having a say in the process.