ECONOMY

Piraeus Bank dismisses report raising questions about recapitalization

Piraeus Bank President Michalis Sallas has dismissed a report alleging that he and the lender engaged in questionable practices as part of a recapitalization process.

In a statement issued late on Monday following a report by Reuters, Sallas said that he would continue his legal action against the news agency, which Piraeus Bank sued earlier this year following another report regarding the Sallas family and their alleged property deals.

?In the long history of the development of Piraeus Bank, we have come up against a number of efforts to undermine, blackmail and libel us,? he said.

?This does not distract us from our main duty, which is the security and progress of the Greek banking system, which is an integral part of the effort we are all making for the country to exit the crisis.?

Reuters claimed in its piece that offshore companies owned by Sallas and his two children paid for shares in the Piraeus Bank, the country’s fourth-biggest, by borrowing more than 100 million euros from a rival bank.

Author Stephen Grey writes: ?Together the shares make the Sallas family the largest shareholder in Piraeus, with a combined stake of over 6 percent. The purchase of these shares has not been declared to the Athens stock exchange by Piraeus.?

According to audit reports seen by Reuters, most of the money borrowed by companies linked to Sallas was allegedly used to buy shares in a Piraeus Bank rights issue in January 2011. The issue was designed to strengthen Piraeus’s capital base, claims the agency.

?The disclosure highlights concerns that Greek banks have been borrowing money from each other and using it to meet recapitalization requirements, but not making that clear,? writes Grey.

The IMF had no comment on the issue, according to the report, and a spokesman for the Bank of Greece declined to comment on Sallas’s holdings in Piraeus, citing banking confidentiality guidelines.

“Our supervision department cannot comment on specific prudential data available or actions taken with regard to any specific bank as such information is confidential,» he said.