State-controlled Agricultural Bank of Greece (ATE) is set to become a leaner, healthier and more commercially oriented financial institution next year, according to a program laid out by Economy and Finance Minister Nikos Christodoulakis yesterday. His plans also include ATE linking up with another bank and the State reducing its majority stake to a minimum 35 percent. The minister said that the bank will launch a search for a strategic partner next year, with the size of the holding to be awarded and management rights to be decided at that time. However, he said that it is obvious that the strategic investor would have a clear and substantial stake and input into management decisions. Christodoulakis said the State will cut its current 85-percent holding down to a minimum 35 percent via the issue of a 100-billion-drachma convertible bond, the sale of 8 percent of ATE stock to agricultural cooperatives and institutional investors and another 10 percent to retail investors. ATE will also lighten its unwieldy portfolio of diverse interests by offloading five of them to strategic investors and floating three on the Athens Stock Exchange. The first group will include Hellenic Duty-Free Shops, Hellenic Sugar Industry, dairy manufacturers Agno and Rodopi, and the Hellenic Animal Feed Industry, while the second will encompass dairy venture Dodoni, the Greek Cooperative Cigarette Manufacturing Company (SEKAP) and ATE Leasing. The bank will also implement a risk management system with the goal of reducing its pile of non-performing loans (NPLs), among the highest in the banking sector. Analysts said the State’s goal of finding a strategic partner for ATE and transforming it into a purely commercial financial institution could turn out to be a laborious task and more difficult than the recent sell-off of another government-controlled bank, ETBA. ATE will be one of the most difficult banks to be privatized off, said one analyst, characterizing the bank as an institution burdened with problems of the past. He said that the fact that the bank has yet to complete its restructuring and that it is hardly a commercial venture could complicate the exercise. He said that ATE’s multiple disadvantages work against its assets. On the plus side, the bank has a network of 440 branches countrywide and five in Germany, which could be considered an asset for a financial institution seeking rapid expansion. Against this is the fact that employees are stuck with a civil servant mentality and possess an inadequate knowledge of modern banking. ATE’s most serious problem, however, is its high percentage of NPLs. Nine-month figures showed the bank burdened with some 350 billion drachmas in bad debts. NPL as a proportion of total loans is a hefty 11 percent against the normal 2-3 percent for the sector. Despite ATE’s spate of problems, analysts said surprises could well happen, as in the case of ETBA, which found an unlikely and eventually successful bidder in Piraeus Bank.