Emporiki Bank plans to clear pension fund deficit to become more attractive to France’s Credit Agricole

Emporiki Bank, Greece’s fourth largest lender, will soon propose a way out of its employees’ pension fund deficit, hoping to clear the way for Credit Agricole to raise its current stake. «We have found a solution which will allow us not to have an actuarial deficit. I hope employees accept it,» Emporiki’s chairman and chief executive, Yiannis Stournaras, told Reuters in an interview. «The proposal will be presented to employees on Monday.» Emporiki’s pension fund deficit is obstructing Greece’s plans to sell more of the bank to Credit Agricole, which currently holds a 10 percent stake, sources close to talks between the Finance Ministry and the French group say. The deficit, which sources say amounts to a few hundred million euros, is preventing the French bank from investing more in Emporiki as it wants to avoid inheriting pension fund liabilities. «Emporiki’s management is absolutely positive as regards the prospect of Credit Agricole raising its holding. We believe this would be mutually beneficial and in line with initial plans,» Stournaras said. Stournaras said the proposal calls for Emporiki’s employee supplementary pension fund to be converted from a defined-benefit scheme to one based on defined contributions. «The proposal will erase the actuarial deficit, both under international and Greek accounting standards,» Stournaras said. If the hurdle is finally overcome, Credit Agricole, which has already invested about 400 million euros in Emporiki, may emerge as its major shareholder with a holding of 20 percent or more. It has right of first refusal for an additional 10 percent. Providing earnings guidance, Emporiki’s chief executive said the group’s full-year profit will be in line with the bank’s performance in the first half. Emporiki Bank’s first-half group pretax profit after minorities grew 31.6 percent to 56.2 million euros. «As regards earnings growth, it will be around the first half’s performance… but this will also depend on the course of the equities market,» Stournaras said.