ECONOMY

Mergers will go on

The zeal with which the failed merger between National and Alpha banks was promoted and publicized has equaled the fears that engulfed those considering the repercussions of a turbulent dissolution of the promising «household.» In our familiar way, we hastened to believe that the new, enlarged National Bank would alone lead the Greek economy to the required competitive modernization, the lifting of all kinds of obstacles to business growth and an overall reduction in the State’s lossmaking presence. The tribulations and the failed efforts to overcome the obstacles standing in the way of a deal are an apt reminder that you don’t change an economy with announcements but with a lot of work, innovative partnerships and visionary planning. Instead of putting the cart before the horses and whipping them, we would do better to ensure that the cart is capable of increasing its speed without being in danger of falling apart. The analogy is that the government should not have engaged in cries of political support for something which even many of its members did not fully understand, but should apply itself to solving the complex problems affecting most of the daily functions of the public administration. The fear that the failure of the National-Alpha merger will deal a serious blow to the earnest hopes for meaningful changes in country’s economic life is indeed exaggerated. It has been correctly observed that the need to create more reliable and efficient enterprises will not be achieved simply by adding existing ones in twos. We do need bigger size, but only on condition that the return to capital employed increases. The aim of restructuring the economy is a larger product, based on stronger profits and allowing more investment. No matter how much we may criticize the judgment of money and capital markets, we must not ignore that they correctly assessed the difficulties involved in the failed merger. They rightly remain unconvinced that still state-managed National Bank has not yet attained administrative and operational independence from its biggest (but not majority) shareholder; indeed, this was widely perceived to be the gain of a would-be deal with Alpha – much more than the legal arrangements whereby the government halfheartedly determined the way in which the administration of the bank will be elected as of next April, rather than appointed. Proof of this was provided by the blackmail uproar raised by the Bank Workers’ Union, which did not miss the opportunity to blatantly behave as the «boss» at one of the worst moments of its recent history. Moreover, the market has shrewdly assessed the problems faced by Alpha Bank since its acquisition of Ionian and the difficulties that the consolidation has presented for the growth of its business. In this context, it was perceived that acquiring a large measure of control over the biggest Greek bank would provide fresh capital for «pasting over» the cracks in profitability, cheap human resources, the largest branch network and significant economies of scale. The failure of the big «summit» merger will not stop the process in other domains. Economy and Finance Minister Nikos Christodoulakis correctly commented that «the free market faces no impasses,» as long as the statement can be interpreted as a confirmation of the government’s resolve to pursue market deregulation more energetically. If the government had not delayed reforms in the labor market for so many years, in the way CEOs of public enterprises are picked, in social security, or in the tax system, the arguments of the opponents of the failed deal would not have seemed so valid. Our country is not the only one in which politicians, trade unionists and businessmen spar among them without being able to clearly prioritize among productivity, competition or protection of the socially vulnerable; special interests, big or small, less or more covert, always fuel friction. And Greece must not be afraid of engaging in an open and sincere debate of these problems. Now that the merger has been canceled, there are a number of questions that need answering: Did the banks’ two unions, in taking a prime role in scuttling the merger, act as proxies for feuding managers? And are the interests of more than 25,000 people – the number of employees in both banks – identical with those of the top brass feuding for the choice assignments? Who will now accept responsibility for the deception of so many people, who thought that they would be part of a powerful group, able to compete on an equal footing abroad? Who will also take responsibility for the fact that certain issues – such as the merger of social security funds, whose solution would be facilitated by the merger – are now further from resolution than before?