Gov’t secures leeway on banks

The government has secured some much-needed breathing space regarding the management of the systemic banks that will come under its control, as an agreement reached with its international creditors does not set a September deadline for the sale of the lenders that will be fully recapitalized by the Hellenic Financial Stability Fund (HFSF), as had been previously foreseen.

Although the representatives of the European Commission, the European Central Bank and the International Monetary Fund – collectively known as the troika – insist that National Bank and Eurobank should not stay under state control for long, they have stopped short of announcing a strict deadline for finding a buyer for them, according to sources.

Instead, the text of the agreement is said to state that the government, the Bank of Greece and the HFSF, in cooperation with the troika, will have to decide by midsummer on the overall strategy for the Greek banking system. This general statement eases the pressure the government would have faced from the imposition of a concrete timetable, especially in the case of National, provided the banks fail to get 10 percent of their share capital increase from the private sector.

This will also allow the government to decide what to do with the non-systemic lenders in the light of the recapitalization that will have been completed by midsummer. A high-level Finance Ministry official said that the planning will concern all systemic banks as well as smaller ones, such as Attica.

The draft agreement had provided for the sale of stakes of 20-25 percent in National and Eurobank to private investors by September. The politically softer wording that has been agreed does not constitute a shift in the troika’s positions, but a mere postponement of definitive decision by a few months.

As the IMF’s top representative in Greece, Poul Thomsen, told an Economist conference in Athens on Monday, “We do not want the state to manage banks; nor do we want the government to direct financing.” The rest of the troika also share the same view, the Finance Ministry official confirmed.

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