ECONOMY

ELTA, bank mean business

The Greek Postal Savings Bank and its parent company, national post office operator ELTA said yesterday they have decided to cross-sell each other’s products in their respective branches, with the collaboration eventually expanding into bancassurance and mutual fund products. The move marks the first time that the two state-owned organizations have ventured into activities outside of their traditional spheres. The partnership is expected to lay the groundwork for the savings bank and post office’s transformation into fully-fledged commercial enterprises eventually. The savings bank, currently in the midst of a restructuring program, is due to be converted into a societe anonyme company and is scheduled to float on the Athens Stock Exchange (ASE) next year or early 2003. ELTA in its turn is evaluating two offers for a 25-percent stake, one of which is a joint bid by the French post office and local courier company Hermes and the other by the Dutch post office. Speaking at the signing of the 10-year contract sealing the partnership between the savings bank and ELTA, Transport Minister Christos Verelis said the collaboration will strengthen both organizations while leading to economies of scale and lower operating costs. The agreement can be renewed for a further three years after the end of the 10-year period. The savings bank and ELTA will cross-sell each other’s products in the initial stage. They will eventually offer bancassurance products, mutual funds and even mortgage loans, among others, he said. The two organizations will be counting on their extensive network – ELTA’s 900 branches and 400 agents, and the savings bank’s 135 branches – to make the partnership a success. The minister said legislation on the conversion of the savings bank into a commercial enterprise will be presented to its employees this week for discussion after which it will be tabled in Parliament. Under the proposed charter, the savings bank promises to retain the entire workforce after the change, with employees given a seat on the board of directors. He also ruled out the possibility of the sale of the savings bank prior to the completion of this process. Market speculation in recent weeks said that local commercial banks have expressed interest in taking over the savings bank. The government is committed to converting the savings bank into a societe anonyme company and then floating it on the stock market in 2002 or 2003, depending on market conditions, he said. Financialwise, Verelis said the savings bank is making good progress. Net profits are projected to increase by 250 percent to 55 billion drachmas this year from 21.7 billion drachmas in 2000. Deposits are estimated to grow by 8.4 percent to 3.05 trillion drachmas this year, mortgage loans by 34 percent to 410 billion drachmas, and loans to public utility corporations by 25 percent to 100 billion drachmas. Bond investments are due to rise by 7 percent to 2.55 trillion drachmas. Savings bank head Androniki Boumi said the organization will be issuing classic and gold Visa cards next year as it expands its range of products. In the meantime, the bank has adopted the necessary legal framework enabling it to offer mortgage loans to the private sector instead of civil servants and public sector pensioners as has been its traditional practice. According to Info-Quest management’s calculations, these unhappy investments resulted in a shrinking of its equity capital by 8 billion drachmas to 52 billion by September 30.