ECONOMY

Call for banks to spread benefits

As the draft bill on a 28-billion-euro bank rescue plan was submitted to Parliament yesterday, Greece’s industrialists called on the Finance Ministry to see that lenders taking part in the package pass on the benefits to the broader economy. The country’s leading group of industrialists, the Hellenic Federation of Enterprises (SEV), said in a letter to National Economy and Finance Minister Giorgos Alogoskoufis that there must be a link between the financial system and the real economy, which has been showing signs of fatigue. «Given the continued uncertainty, it is necessary that there aren’t conditions created where the banking system will be able to hold onto to the capital to safeguard against possible future danger,» SEV said in the letter. «The provision of benefits must be connected with the financing of production in the economy.» Under the rescue plan, the state can guarantee bank loans from the capital market and buy preferred shares in banks to boost their capital, while it also sets a ceiling on executives’ pay. The country’s biggest banks agreed late on Wednesday to the rescue plan, saying that the scheme will enable them to get state funding if and when needed and be on a par with European peers. «The government plan is not so much intended to support banks, but it is more aimed at ensuring that credit continues to flow unabated into Greece’s economy,» Takis Arapoglou, National Bank CEO, told Reuters. «All banks support the plan and have until February 1 to indicate whether they will use the facility,» he said. The draft bill outlining the plan says up to 5 billion euros may be used to buy preferred shares in banks, earning a 10 percent dividend for the state, to boost their capital. Another 15 billion euros can be used to guarantee capital market funding and the state also may issue 8 billion euros of special bonds to inject liquidity. The bill calls for a state representative to sit on bank boards, with veto powers on executive salaries and dividends.