Solution to banks’ pension fund woes could open the way for a new round of takeovers

Banks are intensifying their efforts to arrive at a common solution over the deficits in their employees’ auxiliary pension funds, despite the continued, but apparently weakening, opposition of unions. The next two weeks are considered crucial in the effort to find a solution because banks are expected to publish their quarterly results, for the first time, under International Accounting Standards (IAS), which mandate that any pension fund deficits and provisions for retirement and severance pay costs must appear in the balance sheet, affecting the banks’ capital. In case a settlement is reached in the next few days, then, some bankers say, developments in the banking sector will be very swift. Michalis Sallas, chairman of Piraeus Bank, told reporters that mergers and acquisitions are a distinct possibility by the end of the year. The new tax law favors such developments, he added. It is certain that Emporiki Bank will be the one most immediately affected by any agreement. This would open the way for it to sever its remaining ties to the state. France’s Credit Agricole, a strategic partner with an 11 percent stake, is expected to play a crucial role, perhaps even taking over operational control of Emporiki. Even though domestic partners feign unconcern over potential foreign takeovers, pointing to failed attempts in years past, Emporiki’s possible acquisition by Credit Agricole would change matters drastically. Until now, with the exception of Societe Generale’s takeover of Geniki, foreign banks’ efforts were small scale. Even Geniki is a rather small bank. By contrast, Emporiki has an extensive network across Greece and is a favorite of hundreds of thousands of households. Despite its recent problems, it remains a big player. The positive impact of a foreign takeover has already been obvious in the case of Geniki, not long ago riddled with problems but which now enjoys the highest credit rating among all Greek banks. Thus, it has better access to international money markets than much larger Greek banks.