Banking sector the focus of privatizations this fall

The government’s initial plan to push ahead in August with the sale of its holdings in a number of large enterprises, particularly in the banking sector, does not seem likely to be put into effect before the end of September, sources say. In the banking sector, which has traditionally been the center stage of restructuring deals – with a significant impact on the stock market – much will depend on developments regarding the Postal Savings Bank (TT), which potentially holds the strongest interest due to its extensive national branch network. A sell-off would also give public coffers a strong revenue boost. The government also expects sizable revenue inflows from the sale – either partial or whole – of share blocks it controls in the National Bank of Greece (NBG), the country’s largest, and Emporiki Bank (9.6 percent); such sales are also seen as strong signals of the government’s determination to promote restructuring policies. Postal Savings Bank The most likely deal involving TT currently appears to be a merger with the Bank of Attica, whose major shareholder, the engineers’ pension fund (TSMEDE), has initially expressed interest in buying a 30-35 percent share. It is expected to shortly appoint a valuator and proceed to conduct due diligence in TT, with a view to completing the process by month’s end and then notifying Economy and Finance Minister Nikos Christodoulakis of its decision. The government has not yet appointed its own valuator but sources say it is considering any scenario that will facilitate a sale, currently considered one of the government’s strongest cards in the banking sector and capable of bolstering the stock market in the runup to the general election. A TT deal is not independent of developments in other banks. Given that the privatization cannot be completed before the end of the year, if France’s Credit Agricole has by then increased its present 11 percent stake in Emporiki Bank, the latter could be another strong suitor for TT. The acquisition of 9.6 percent of Emporiki by the French, who are unofficially said to be favorably disposed, would raise their stake to 20.6 percent and is seen as effectively taking the Greek bank out of the expected next round of mergers and acquisitions in the domestic banking sector. It would also redirect the energies of other suitors for Emporiki toward other Greek banks. According to sources, the government has offered to «facilitate» Credit Agricole, by giving it time to smooth out its recent merger with Credit Lyonnais before officially inviting it to consider raising its stake in Emporiki. The letter is planned to be sent this month and the French will be asked to reply within 30 days. NBG To be sure, Emporiki’s further privatization is seen as a much easier and less complex scheme to promote than NBG’s. For one thing, the sell-off of, say, a 10 percent interest in NBG, which has a market capitalization of more than 4.6 billion euros, would be a major revenue booster for the government at a time of pressing fiscal realities, but would obviously be «for serious bidders only» and imply a very important change in the Greek banking system which the government cannot ignore. «NBG is a strong pole of the banking system, identified with the course of the Greek economy. Any decisions, therefore, will aim to further strengthen NBG’s position, without ever depriving it of its national developmental character,» Christodoulakis said in a recent interview. The obvious deduction is that the government aims to sell as much of NBG as will allow it to raise revenue without losing control over the choice of management as a major shareholder, on the one hand, and help create a climate of euphoria in the stock market, on the other. Even the scenario of a strategic alliance which is being raised could not easily bring about any essential changes without strategic partners having substantial influence on management. In such a context, the smoothest and most agreeable solution appears to be the transfer of an interest to foreign institutional investors. In any case, no developments are expected before the end of next month. The government is also hoping to make effective progress in September on all other schemes involving the sale of public assets. They include the entry of strategic investors into the Public Gas Corporation (DEPA) – in which interest seems to be widening – and into the Athens Water Supply & Sewerage Company (EYDAP), which Christodoulakis announced recently. The much-awaited amendment setting up a revamped New Olympic Airways is expected at month’s end after more recent complications in the negotiations with unions. The privatization of the Hellenic Exchanges holding company, which operates the Athens bourse, with the sale of shares to the public by the consortium of banks that now control it, is also projected for September, as is the flotation of a 25 percent stake in Hellenic Tourism Properties (ETA).