Bank stocks ride a wave of euphoria

The solution being prepared by the government for banks’ unfunded pension liabilities is bolstering interest in bank stocks, which largely set the tone for the Athens bourse as a whole. Economy and Finance Minister Giorgos Alogoskoufis said yesterday that draft legislation setting up a common supplementary pension fund for the sector will be ready next week, and the fund will be optional for any bank to join. The banks that could join include Agricultural, Emporiki, Alpha, Piraeus, Attica and General. The market seems to have been encouraged by the government initiative, which comes after more than six months of fruitless negotiations between banks and staff. The solution to the problem, necessitated by the mandatory adoption of International Financial Reporting Standards this year, will end a chronic situation and open the path to a new round of mergers and acquisitions in the banking sector. The defusing of tension among banks over the issue after the recent contacts has evidently also been welcomed by the market. Stock market circles say that such improved prospects have rekindled the long dormant interest of Greek institutional investors in the bourse, where their foreign peers have virtually dominated the scene for some time. The Athens Stock Exchange (ASE) general index again climbed above 3,000 points this week, standing 10 percent higher than at the beginning of the year, and led by banks whose sectoral index has gained 12.80 percent. National Bank has made the biggest advance this year, 21 percent. Yesterday it closed only a breath away from a new year-high at 29.54 euros, and accounted for about one-fifth of the ASE’s total turnover. Emporiki Bank and Alpha have also attracted strong buying interest recently. They are seen as the main beneficiaries of a solution to the pension problem, particularly Emporiki. Eurobank, which is opposed to and unlikely to participate in the common fund, has only made a marginal gain since the beginning of 2005.

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