ECONOMY

BoG governor defends ATEbank-Piraeus deal as only viable option

If ATEbank?s healthy assets were not handed over to Piraeus Bank, the state-controlled agricultural lender would have shut down, Bank of Greece governor Giorgos Provopoulos told a parliamentary committee on Friday.

Provopoulos told MPs that ATEbank was not viable and required a capital boost to continue operating and this paved the way for the merger with Piraeus.

The central bank governor said that the troika wanted the bank to be closed down but that BoG and the government wanted to avoid this option because it might destabilize Greece?s financial system

“The systemic stability that we have carefully safeguard would have been shaken,» he said, adding that the European Central Bank had decided in July that it would no longer provide liquidity to ATE because it was undercapitalized and there was no prospect of its main shareholder, the Greek state, providing fresh capital.

Provopoulos said the closure of ATEbank would have caused a new set of problems.

?We would have had more than 5,000 unemployed people,? he said. ?We would also have to find 14 billion euros to reimburse depositors and another 6.3 billion euros to return liquidity to the Eurosystem,? he told MPs.

Opposition parties have criticised the ATE-Piraeus deal, arguing that the private lender has been gifted the deposits and assets of the state bank. Provopoulos, however, challenged the view that there was anything untoward about the deal.

“The transaction process was done with absolute respect for law and transparency,» he told the committee.

He pointed out that the government?s options were limited since Greece?s bailout deal prevented it from using funds from the Hellenic Financial Stability Fund to recapitalize ATE.

ATEbank?s branch extensive network has been absorbed by Piraeus. The combined entity has 75 billion euros of assets, 35 billion euros of customer deposits and 47 billion euros of loans, according to Piraeus.