Government seeks shareholder’s OK for bank chief’s appointment

Economy and Finance Minister Giorgos Alogoskoufis will meet today with managers of French bank Credit Agricole to inform them of changes in the top management of Emporiki Bank, in which Credit Agricole holds an 11 percent stake. The government has decided to place Emporiki’s head Yiannis Stournaras, an economist appointed by the previous Socialist government in 2000, with Giorgos Provopoulos, an economics professor who also advises Alpha Bank. Given the new conservative government’s declared aim of completely privatizing all state banks under direct or indirect state control, it is expected that Alogoskoufis and the French bankers will discuss the possibility of Credit Agricole acquiring a further stake in Emporiki. Yesterday, Alogoskoufis met with Provopoulos and Takis Arapoglou, the government’s appointee as governor of the National Bank of Greece. Arapoglou will take over his position today, as National Bank has been without a governor since the death of Theodoros Karatzas early in March. National’s board will appoint Arapoglou pending final approval at the shareholders’ annual general meeting (AGM), likely to convene in mid-April. The names of the new deputy governors will be released before then. On the other hand, Provopoulos will have to wait for Emporiki’s AGM, also due to take place in mid-April, to take over from Stournaras. Retail potential The National Bank group employs 20,752 and its total assets are 53.89 billion euros. Arapoglou’s big challenge will be to maintain National Bank’s supremacy in the Greek market while creating a leaner institution and continuing his predecessor’s strategy of regional expansion. National has a vast reserve of deposits by clients which it has not yet taken full advantage of. Currently, the amount of outstanding loans stands at 58.5 percent of deposits (excluding repos), while for most other big Greek banks it exceeds 100 percent. This is a clear indication of National’s great potential for expanding its retail banking business. Pensions quagmire Emporiki Bank – formerly the Commercial Bank of Greece – is Greece’s fifth-largest bank, behind National, Alpha Bank, EFG Eurobank Ergasias, and Agricultural Bank. It employs 7,682 and its assets are worth 16.88 billion euros. The biggest problem the new head will face is the bank’s pension scheme, which guarantees high pensions irrespective of the level of social security contributions. With the obligatory introduction of International Accounting Standards (IAS), Emporiki, like every other bank, will be forced to include in its annual financial statements provisions for future pensions, retirement lump sum payments and severance payments. In Emporiki’s case, this would dramatically worsen results. It is this situation that has forced Credit Agricole to make a possible strategic partnership conditional on the resolution of the pension system. A restructuring of the system itself requires the approval of employees, which could be difficult to obtain.

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