ECONOMY

In Brief

ATEbank head favors mergers with state lenders The head of state-controlled lender ATEbank said a merger with other state banks was a better option than the government accepting the bid from Piraeus Bank, and it would help the economy. «Forming a state-controlled banking pillar that would consolidate ATEbank, Hellenic Postbank [TT], Attica Bank and the Loans & Consignments Fund would benefit the Greek economy,» ATEbank Governor Theodoros Pantalakis told Reuters. «This [bigger group] would support government plans for growth and the economy’s modernization in crucial sectors, especially in rural areas where it is more needed,» he said. Greece’s Socialist government has called on banks to regroup and consolidate to better cope with an adverse economic environment; the country’s debt crisis has made them dependent on the European Central Bank for liquidity. Piraeus Bank has offered 701 million euros ($891 million) in cash to buy government stakes in ATEbank and TT. The offer is being assessed by the government and its advisers Lazard, HSBC and Deutsche Bank. ATEbank, which is 77 percent government-owned, was the only Greek lender to fail a European stress test in July, scoring a Tier 1 ratio of 4.36 percent under the simulation’s most adverse scenario. The bank, which has a current market value of about 930 million euros, swung to a first-half loss of 110 million euros ($140 million) due to higher provisions and trading losses. It plans to raise capital of at least 250 million euros ($318 million). «A merger involving all these banks would not require cash outlays on the part of the government to strengthen the new entity,» Pantalakis said. (Reuters) Residential property market picks up in Cyprus NICOSIA (Reuters) – House prices in Cyprus fell at a slower pace in the second quarter of 2010, with locals starting to make a reappearance in the property market, data from the RICS Cyprus property index showed yesterday. Home prices fell on average 2.5 percent from April to June, compared to a 4.5 percent drop in the first quarter of the year. Demand for homes on the east Mediterranean island fell particularly among Britons and Russians as a result of the economic slowdown in their domestic economies, the survey prepared by the Cyprus branch of the Royal Institution of Chartered Surveyors and Cypriot chartered quantity surveyors showed. Property sales to non-Cypriots slumped in 2008 and 2009 amid the global economic turmoil. Areas particularly affected were coastal areas popular with tourists. Apartment prices fell 3.3 percent in the southeast coastal areas during the second quarter and, in the west, home prices fell 4.0 percent, RICS said. ECB funding European Central Bank funding to Greek banks dropped 0.3 percent at the end of August from the previous month, Greek central bank data showed yesterday. Lending to euro-area credit institutions related to monetary policy operations, which reflects ECB lending to Greek banks, stood at 95.9 billion euros ($121.8 billion) compared to 96.2 billion at the end of July, the Bank of Greece said. Greek banks have lost wholesale market access in the wake of the country’s debt crisis, becoming increasingly reliant on the ECB to fund their operations. ECB funding stood at 49.7 billion euros at the beginning of the year. (Reuters) Albanian 3G license Albania’s four mobile phone operators have asked the government to scrap plans to issue a single 3G licence for 12.5 million euros to avoid creating a monopoly and urged it to allocate four cheaper licenses instead. AMC, owned by Greece’s OTE, Vodafone, Turkish-owned Eagle Mobile and Albanian-owned Plus jointly asked the government in a statement late on Wednesday to review its decision to issue only one license. «The limitation of issuing a single license through a public tender could endanger the process and create a monopoly in the Albanian market,» the mobile operators said in their statement. Simultaneously issuing four permits at a favorable fee for the whole valid 3G spectrum would better serve the government’s agenda and increase demand for fast broadband, in turn creating competition and encouraging investment, the operators added. (Reuters)