Emporiki sale by March

Deputy Finance Minister Petros Doukas said yesterday the conservative government wants to sell a major stake in fourth-largest lender Emporiki by March as part of an ambitious privatization plan and that French bank Credit Agricole is interested in taking control. Deputy Finance Minister Petros Doukas told Reuters in an interview the conservative government was determined to limit as much as possible the state’s stake in companies such as Emporiki as part of efforts to restructure the Greek economy. «We want to sell Emporiki, including management, and we are planning to do it in the first quarter of the year,» he said. «We want to privatize the bank, to sell the controlling stake.» Credit Agricole, which now holds 9 percent of share capital and 11 percent of voting rights in Emporiki, has expressed interest, he added. «They want to buy the bank, including the management. They have expressed their initial interest to us,» Doukas said. The Greek State expects to raise about 350 million euros by selling a 9.5 percent stake it directly controls. It also wants to sell another 10-15 percent of Emporiki which is held by state-controlled pension funds as part of a 30 percent stake in the bank. The French bank’s unclear intentions toward Emporiki had created tensions with the Greek State. But Credit Agricole declared its commitment by participating in a recent rights issue of 397 million euros aimed at boosting equity after pension fund liabilities. The French bank could raise its stake to about 30-35 percent, making it Emporiki’s main shareholder. Foreign institutional investors hold 21.7 percent and other minor shareholders 25 to 27 percent. The bank has a market capitalization of 3.79 billion euros. Doukas said the government has made it a priority to reduce its presence in the Greek economy, a move economic analysts say is long overdue after more than 20 years of nearly continuous Socialist rule. As part of the privatization plan, 10 percent of fifth-largest lender ATEBank will be sold in 2006 and the Post Savings Bank will be listed on the Athens Stock Exchange. «We are planning to sell 10 percent of ATEBank this year and our intention is to list the Post Savings Bank in the fourth quarter of 2006,» Doukas said. The state expects revenues of 1.65 billion euros from privatization this year, to help reduce its debt to GDP ratio to 104.8 percent this year from an estimated 107.9 percent in 2005. Some of the privatization revenue will come from the sale of a majority stake in ailing state carrier Olympic Airlines. Olympic sale Doukas said the government would relaunch Olympic Airlines by October, hoping a boost from private capital and a more favorable global environment will finally make the ailing state carrier a success. Facing EU fines after decades of bad management, the airline founded by shipping tycoon Aristotle Onassis in 1957 and nationalized in 1975 has been put on the block repeatedly but has attracted no suitors. «After 30 years of turbulence, we are now confident the new airline will succeed,» Doukas said. «We hope that the new airline will operate by October.» He said the state would retain a 20-35 percent stake, while the rest would go to private investors, such as venture capitalists, Greek-owned shipping groups and possibly airlines. Asked why investors would be interested in a loss-making airline, Doukas said they would be lured by an improving global climate for the sector and especially the region. Olympic fell into financial hardship in the late 1970s, and strikes by its powerful unions have often grounded flights. It turned a profit only once, in 1995, and its then-CEO was sacked a few days after results were reported, mostly because of his turbulent relations with the unions. After repeated failures to sell the carrier, the relaunch is seen as a way to avoid the political cost of 1,800 layoffs. Olympic is also under pressure from the European Commission to pay back as much as 540 million euros in illegal state aid. The EU executive has found that previous cash handouts to Olympic were distorting competition and threatened Athens with infringement procedures. The new plan hinges on approval from the EU, which forced Belgian airline Sabena to shut down in 2001. Doukas said Greece was in talks with Brussels. «We are optimistic we will get EU approval because we will present a sound business plan, the company will be owned by private concerns, and the airline will operate without government interference or subsidies,» he said. Doukas was optimistic a business plan drafted by industry experts Sabre and applied by the private investors as they see fit, would mean success for the new airline. The share capital will be 150-200 million euros, while the size of the new airline will be similar to the existing one. «Eventually it will be whatever the market demands, but it will have enough capital to do a good job,» he said. He said the new airline’s name had not been finalized but would include the word «Olympic.» Revenue blues The government hopes that privatization revenues will help it avoid repeating its 2005 debacle when ordinary budget revenues fell well short of initial estimates. Revenues rose by 6.2 percent in 2005, well short of an original 11.4 percent target aimed at keeping the budget deficit below EU limits, Doukas said. The original 11.4 percent target was published in late 2004. But poor revenues forced Greece to revise it down despite a one percentage point increase in value-added taxes (VAT) to 19 percent last April. The government also estimated in November that the 2005 budget deficit would come out at 4.3 percent of gross domestic product (GDP), well above the European Union’s 3 percent cap. The final figure is expected in February. Greece faces EU sanctions unless it brings the figure under the 3 percent ceiling. Doukas said revenue growth for the first half of January was above 2006 targets. The government wants to increase revenues by 7.8 percent for 2006 to help reduce the budget deficit to 2.6 percent of GDP.

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