Council to oversee bank plan
The Finance Ministry will set up a supervisory council to ensure that banks benefiting from a 28-billion-euro state bailout plan stick by the rules and pass on liquidity to the economy. Greece has tabled a bill in Parliament to inject capital into banks and improve their liquidity in a bid to help shield the domestic financial system from the global credit crisis. Banks have until February to decide whether they will accept the conditional offer. Economy and Finance Minister Giorgos Alogoskoufis told reporters the council, which he will chair, will meet once a month and ensure that credit is being channeled to those who need it. «Its role is to make sure that the liquidity finds its way into the Greek economy to help it better deal with the financial turmoil and sustain economic growth,» he said. Banks that choose to benefit from the rescue plan will not be allowed to distribute more than 35 percent of profits to shareholders in dividends as a means of helping strengthen their balance sheet. Other conditions include the banks accepting state participation in their share capital via the sale of preferred shares to the government. The government may spend up to 5 billion euros to buy stakes in banks. It will earn 10 percent annually on these preferred shares – half a billion euros if it spends the entire amount. The conservative government has been accused by opposition parties and senior bankers of preparing an ineffective plan that will only serve to help fatten up bank profit margins at the cost of the taxpayer. The vice president of buyout firm Marfin Investment Group (MIG), Andreas Vgenopoulos, said the government’s preparation of the plan was inadequate and that it does not guarantee the money will «fund productive areas of the economy.»
