The difficulties in privatizing Emporiki Bank

The most important privatization that will be completed by the end of the year is that of Emporiki Bank. The peculiarity of the case is that there is already a foreign shareholder in the bank, France’s Credit Agricole. The large but rather bureaucratic French group must decide whether it is interested in the stake which the government is putting up for sale and which will give it control of Emporiki. To date, the French have not shown particular interest and privately appeared unhappy because the bank’s share price had been rising in recent months. This was part of a general bourse buoyancy, and it was natural for the market to make a positive assessment of management’s successful drive to financially rehabilitate the bank. Early this week Emporiki reported a 112.5 percent rise in first-quarter net profit to 52.1 million euros, reflecting Giorgos Provopoulos’s prudent and effective management. The government, for its part, has recognized a right of first refusal to Credit Agricole’s although it does not formally have it. In this way, it is seeking to persuade the French that if they are not the highest bidder they can sell their shares along with the government’s. It is not an easy exercise, given that Credit Agricole must sell its stake in Emporiki if it does not wish to buy more of it. This is crucial because it is unlikely that another banking group will want to invest in Emporiki as long as Credit Agricole remains a large shareholder, with stakes also in the subsidiaries. The fact that the French bank earlier this week sold about 1.6 percent of voting rights in Emporiki back to the government is a significant development as its total share is now reduced to below the crucial 10 percent. However, this does not mean it has made the definitive decision. The French bank seems to be keeping its options open.

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