Irresponsible transactions

Greek enterprises are suffering from intense liquidity problems as a drop in consumption and the pressure of high indebtedness have created an adverse environment. Most companies, which saw their profits plummet in the first quarter of 2001, do not expect a recovery in the second quarter. This bad news is worrying the government which seems to have placed its hopes for a recovery on bankers. But it is not going to be easy for them either. Having cut their costs at the expense of depositors, by slashing interest rates to near zero, they see that many of the loans they gave to enterprises are not being paid back and are concerned about the viability of the debt-ridden companies. On top of this, they have been entrusted with the difficult mission of finding foreign investors willing to buy shares in public enterprises and satisfying the State’s urgent need for extra revenue. The government insists on selling small chunks of public companies, further hurting the stock market and retail investors. The government’s last such sale, an 8-percent chunk in former state telecoms company OTE, resulted in a speculative raid which depreciated the stock and actually exposed the market’s lack of credibility. The sale – which reduced the State’s stake in OTE to 34 percent – was conducted through a private placement for which the intermediaries, that is domestic and foreign banks, got hefty commissions. On top of that, the State sold the shares at a 6-percent discount, prompting the new buyers to sell them immediately on the market in order to lock whatever gains they could. The Athens Stock Exchange instructed brokers on Friday June 14 to refrain from fulfilling sales orders from investors who had not even taken possession of the share. This suggestion was widely ignored. Not only that, the ASE allowed banks, toward the end of the day, to transfer the shares to their very temporary owners, before the transaction was cleared by the bourse’s Central Depository. By acting in this way, the ASE effectively absolved those who, on that Thursday and Friday, were selling something they did not yet possess. The final result was that, in four sessions, from June 13-18, OTE’s stock lost in value the exact amount, 675 million euros, the State earned from the sale. The bank, an index heavyweight, slumped 21.43 percent to close at 1,925 lira and brought sales in other large banks.