Bank pensions move on

Shareholders of Emporiki Bank, Greece’s fourth-largest lender by assets, late on Tuesday approved the abolition of its employees’ existing auxiliary pension fund and its transfer under the provisions of the government’s recently passed law for a fund designed to cover all bank workers. The development, which took place while protesting employees scuffled with riot police outside the venue in central Athens, is the first practical step in resolving the long standoff between banks and the Federation of Bank Employees (OTOE) over unfunded retirement lump-sum liabilities and the form which the new fund should take. It allows management to plan its next step, a rights issue, estimated at between 350 million and 400 million euros, to boost its equity and capital adequacy ratios. The subject has been referred to a repeat general assembly, scheduled for September 5. Emporiki’s equity was reduced by 712 million euros to 560 million euros due to the 1.1-billion-euro cost of its inclusion in the new state-controlled fund. Last month, the bank said it was considering a rights issue of 400-500 million euros. It is considered likely that France’s Credit Agricole, which already has an 11 percent stake in Emporiki, will participate in the rights issue. Its stance is seen as crucial for the future of the Greek bank and the government, which today controls about 42 percent of Emporiki, has made no secret that it would like Credit Agricole to boost its stake. Such a development would be a welcome signal, especially to foreign investors, for its broader privatizations program from which it hopes to raise about 1.5 billion euros this year in order to pay down public debt. However, the French have still not made their intentions clear, and their recent refusal to participate in a placement to institutional investors of a 5.2 percent stake in Emporiki has given rise to speculation that they will not participate in the share capital increase. In such a case, Emporiki will have to look for other partners, with the government always preferring a foreign option.

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