Bank recap requires extra time

The completion of the recapitalization of the country’s systemic banks within timetable – by end-April – is technically difficult, the board of the Hellenic Financial Stability Fund (HFSF) warned on Wednesday, echoing lenders’ demands for more time to be given to the process.

HFSF president Panayiotis Thomopoulos noted that the main banks will need more time in order to raise funds through the market in an organized fashion and avoid congestion. He stressed that it is not possible for all the major lenders to move ahead with share capital increases in such a short period of time. Although the climate has improved over the last few months in Greece, more time is required for the consolidation of positive sentiment and for long-term institutional investors to start eyeing Greece again, said Thomopoulos.

Asked about the possibility that National, Alpha, Eurobank and Piraeus may need more than 50 billion euros for their recapitalization, Thomopoulos said that amount will suffice as it includes a safety cushion in case additional requirements are needed.

Regarding the all-important participation of private investors in the capital increases, HFSF vice president Haralambos Kyrkos said the main obstacle is the banks’ negative net positions. “This is like asking investors to place 100 euros in something that on the following day will be worth 50 euros,” he said.

He acknowledged that attracting private investors will be very difficult and stressed that the fund had proposed to the country’s creditors various technical solutions to resolve the issue of negative net positions but they were rejected. As things stand, he said, investor participation will be very difficult, although he did not rule out expressions of interest from specialized investors who will discern the long-term opportunities that are opening in the country.

The HFSF board also presented on Wednesday the plan for the staff of the new Hellenic Postbank, which provides for pay cuts from 10 to 60 percent, depending on salary levels, and a voluntary exit program for about 700 employees.