Unwieldy banking acquisitions

Major foreign banking groups that have invested heavily in Greek banks appear to have had a rather disappointing experience so far. A recent false rumor that France’s Societe Generale (SoGen) was considering withdrawing from Geniki Bank has caused concern in the government, which however has responded in a rather vague manner. According to reports from the government’s economic staff, in the case of the sale of Attica Bank, both Greek and foreign suitors will be considered, while regarding the further privatization of Postal Savings Bank the government would prefer to sell only to foreign investors. At least this is the intention of Finance Minister Giorgos Alogoskoufis. Meanwhile, the fact is that two French groups operating domestic banks in Greece, Credit Agricole (Emporiki Bank) and SoGen, do not seem to be particularly happy with their returns so far. This, in turn, seems not to be the best advertisement for state plans and understandably gives rise to a certain degree of skepticism about future developments. However, officially at least, the issue in question is being played down. Early last week, SoGen officials in Paris explained that it would be premature to make decisions regarding their Greek subsidiary, especially since the new administration appointed at Geniki has not yet produced results. On the other hand, Geniki has not yet posted positive results since its takeover. And according to Greek bankers, the selection of SoGen by the then finance minister, Nikos Christodoulakis, was based on the main criterion of the bank’s rapid recovery. But SoGen seems determined to persist in its efforts, at least for the time being. Against this background, next month’s share capital increase is considered imperative to bolster Geniki’s capital adequacy. Sources close to the bank’s management said a withdrawal by SoGen is, for now, out of the question. The picture at Emporiki is slightly better, but one-and-a-half years after Credit Agricole acquired its full control, the first indications are somewhat mixed. However, Credit Agricole is determined to grant the time loan required for the fresh efforts initiated by the new management team. One question that still remains unanswered is: Why do Greek governments insist on bringing in foreign investors? An explanation provided by one domestic banker is that «foreign investors are made up of professors, not market players,» adding that it would be a mistake to sell Postal Savings Bank to foreign investors.