ECONOMY

Emporiki Bank chief says Q1 results will be pleasant surprise

Giorgos Provopoulos, CEO of Emporiki Bank, Greece’s fourth-largest lender by assets, said yesterday he was optimistic for a solution to the pressing issue of banks’ social security unfunded liabilities, including Emporiki, which has the biggest problem. «Seeing the latest developments among all banks and taking into account the government’s statements and commitments for our case, allow me to share with you my optimism for a solution of this issue, and in a way which I believe will fully safeguard everyone’s interests, staff, pensioners and the bank itself,» he told Emporiki’s annual general meeting. The issue has become pressing due to the requirement of International Financial Reporting Standards (IFRS) – which all listed companies must adopt this year – that the unfunded social insurance liabilities, estimated to total about 4-5 billion euros, be written down on banks’ balance sheets. For some banks, particularly Emporiki, these liabilities would be large enough to seriously erode their capital base. Provopoulos presented a comprehensive program of restructuring and rehabilitating the financial position of the group, and even said that its first-quarter results will be a surprise for many. He focused on management’s efforts at cost-cutting and modernization of the network and, for the first time, the linking of pay with productivity. «These efforts are bearing fruit and this will be reflected in the bank’s performance this year,» he stressed. Provopoulos said Emporiki’s reported group losses of 67 million in 2004 was the result of the ongoing rehabilitation drive. «We dared bring to the surface structural anomalies, organizational weaknesses and accounting discrepancies of past fiscal years which have long undermined the bank’s credibility and standing,» he said. He noted that for fiscal 2002, about 750 million euros was written down against the bank’s equity capital. The amount roughly corresponds to proceeds from subsidiary Ionian Bank’s sale, a large part of which was spent on shares, derivatives and bonds.