The so-called «social package» of handouts, mostly to the economically disadvantaged, is not something new. Such announcements are part-and-parcel of every prime minister’s speech at the Thessaloniki International Fair. Economy and Finance Minister Nikos Christodoulakis has made it clear in advance that any handouts will be limited and will go only as far as the budget can afford without straying too far from the intended deficit target. Still, limited handouts will make some people unhappy and the fact that elections are, at most, eight months away, forces the government to find other ways to present a better picture for the economy. The stock market is one way. The rising trend over the past five months has created expectations which, to a great extent, depend upon the government’s next moves. During the past few weeks, the market rise has been based on bank shares and was fed by speculation concerning the government’s sale of at least part of its bank holdings, now held by state portfolio management company DEKA. Initially, Christodoulakis had bold plans. However, circumstances are expected to force him to follow a lower-key policy, even if the market is ripe for some big deals. The choices made by Christodoulakis will depend on his need for revenue to keep close to his budget targets and to help decrease Greece’s enormous public debt. In this respect, selling a 10 percent share in National Bank – half of the State’s direct holdings in Greece’s largest bank – fulfills the need for revenue. Both Christodoulakis and the bank’s management appear to have agreed to sell the 10 percent stake to institutional investors through the tried-and-tested method of bookbuilding. What concerns both sides is the terms under which the shares will be sold, as there is pressure from would-be underwriters for a significant discount. The government and the bank do not want to find themselves in a position where the sale will be spoiled by a feeling that the price is too high. In the case of National Bank, the developments were more or less expected. However, in the case of Emporiki (formerly Commercial) Bank, the optimism shown earlier has evaporated. The natural development in this case would be for the State to sell its 9.6 percent stake in Emporiki to France’s Credit Agricole. This way, the French Bank’s stake in Emporiki would rise to almost 20 percent, making them the bank’s largest shareholder and completely freeing Emporiki from the State’s embrace. However, the French pose a precondition – a lasting solution for bank employees’ pension funds – which Christodoulakis refuses to consider, for the time being. As things stand, Credit Agricole will not exercise its option to buy the State’s shares in Emporiki; the stock will be sold to institutional investors instead. Given that Emporiki and Credit Agricole have agreed to cooperate until 2008, at least, the shares are unlikely to be bought by a single investor. Credit Agricole’s withdrawal is highly unlikely, given the fact that they bought the shares at very high prices. The entire outcome will benefit domestic banks, which view the entry, or expansion, by a big foreign bank warily, to say the least.