MPs grill NBG deputy
The acquisition of Turkish bank Finansbank by the National Bank of Greece (NBG) was yesterday debated by Parliament’s Economic Affairs Committee in a tumultuous session. NBG Deputy Chairman Yiannis Pechlivanidis came under attack by opposition deputies who criticized his dual role as a top manager and the chairman of the bank employees’ main pension fund. In his testimony, Pechlivanidis said that the fund will have to pay some 75 million euros to participate in NBG’s upcoming capital increase and that it needed more information before it could decide to participate. The NBG deputy head told the committee that the regulations of the United States’ Securities and Exchange Commission (SEC) impose restrictions on the bank’s management regarding the capital increase process and added that the fund he represents has made no inquiry to NBG or any other bank for a loan that would allow it to participate in this capital increase. Responding to MPs questions, Pechlivanidis said that, among the employees’ pension funds, only the main fund and the self-insurance fund had the ability to participate in the capital increase, provided they sold part of their bonds portfolio. By contrast, the auxiliary pension fund and the health fund have too little liquidity to participate. Risky investment Alexandros Moraitakis, head of the Association of Athens Stock Exchange Brokers (SMEHA) said that, in acquiring Finansbank, NBG exposed itself to four kinds of risks: political, military, financial and business. He added that information over the deal was scarce, especially to those bodies and people with a legitimate interest in NBG’s welfare. Moraitakis revealed that the legality of the procedure being followed was dubious, because it was not the proper procedure «first to approve the business plan for such an acquisition and then inform investors.» He also emphasized the fact that NBG will need to proceed with a second round of capital increase since, under Turkish capital market rules, it must then submit an offer to acquire a 90 percent stake in Finansbank. «It is obvious that National Bank is taking a considerable short-term risk, higher than future benefits, since it becomes vulnerable to changes in the financial markets, rises in global interest rates and political developments,» Moraitakis concluded. Ioannis Vartholomaios, head of the Social Security Foundation (IKA), told the committee that «we will support the NBG’s capital increase; however, this does not mean we will take part in it.» Vartholomaios said that he had been «informed in general terms» of the Finansbank deal by NBG CEO Takis Arapoglou and added that, although IKA had sufficient reserves to take part in the capital increase, its 23-member board would make the final decision. «Since you acquiesce to the capital increase, you will be prosecuted for a felony in case you do not participate,» retorted Socialist MP Giorgos Floridis.
