Will bank ownership improve ASE?

Who must the bourse belong to? The first stock exchange facility in Athens in the 19th century was located in a coffee shop on Aeolou Street, which belonged to an Italian and was a meeting place for merchants and upright citizens. Its more official successor, the present Athens Stock Exchange (ASE), has been a public organization to this day. Next week, however, Parliament is likely to pass a bill allowing the transfer of 34 percent of Hellenic Exchanges (HELEX), the ASE’s holding company, to the country’s big banks; together with their subsidiaries they will possess a 55 percent interest in the bourse. The development raises a couple of extremely important questions: Is it right and desirable for big banks to exercise such control? And what is the future of the Greek stock market under its new owners? Obviously, this privatization holds theoretically important implications for those who control an important channel of funding for businesses. To be sure, with HELEX the government seems to have exhausted the limits of its privatization capabilities. The bourse became a societe anonyme and was listed on itself! And as the government does not have many opportunities, or is reluctant to make a real privatization of a productive enterprise, it ended up selling the bourse itself. The money it expects to raise is estimated at less than 89 million euros, a drop in the ocean of the public debt. It is true that before opting for the banks, the government considered the option of one of the big foreign exchanges buying a large stake in the Athens bourse. None of them showed any interest, perhaps in part due to the previous negative example of Euronext’s acquisition of the Lisbon exchange, whose prices and trading volume had skyrocketed before Portugal’s entry to the eurozone, only to plummet afterward with the withdrawal of big institutional investors. There was also some exploration of the possibility of bringing back as main shareholders HELEX stockbrokerages, but neither did they show much interest, evidently drained of any enthusiasm in the midst of the present market doldrums and of any hopes for substantial recovery. The banks that will now assume control will subsequently be able to disperse part of their shares to other investors; it will be the end of a privatization without any particular meaning, as the biggest part of the domestic markets of telecommunications, energy, water supply and banking is directly or indirectly controlled by the government. But the change certainly boosts the influence of the big banks on the country’s economy. Banks, which usually manage stock issues and theoretically advise their clients on whether to buy a stock, will also control the organization where it is traded. Even if the overseeing and administrative responsibilities of the bourse are transferred to the Capital Market Commission, the conflict of interests is unmistakable. On the other hand, part of the reaction against «the oligopolistic banking market» comes from stockbrokers that are not bank subsidiaries. But the essential question is whether, under its new owners, the ASE can fulfill its task of securing funding for companies and real opportunities for investors.

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