Banks aid businesses

Banks have begun to intervene directly in the operations of debt-laden companies in an effort to limit the risks and to try stave off, to the greatest possible extent, the growing crisis in the private sector. The consistent slide of the Athens Stock Exchange, which National Economy Minister Nikos Christodoulakis called an «inverted bubble» yesterday, has shown up the problems stemming from the thoughtless investments of the boom of 1999-2000 and the strategic mistakes made by businesses. This has forced banks to take urgent rescue measures. Commercial banks have already begun to exert strong pressure by demanding administrative and operational changes in companies that are deeply in debt, cost-cutting measures and infusions of capital through new share offers. Large loans, an inability to pay them off and the consequences of the crisis in capital markets have revealed the serious management problems in many companies and the need for drastic action. In order to pay loan installments, banks are demanding the sell-off of assets. Indicative of this was the auctioning of a luxury house in Ekali owned by a major shareholder of a listed industrial company a few days ago. The house was valued at 11.7 million euros. The bankers, in effect, are imposing a process of restructuring in the business sector so as to avoid extreme situations later and to give time to businesses so that they can exploit the opportunities provided by the EU’s Third Community Support Framework and the Olympic Games. Furthermore, the banks believe that interest rate levels allow rescue operations and offer the chance to control the crisis which, if it were to come to a head, could turn into a landslide that could sweep away the banks themselves. Christodoulakis met with Prime Minister Costas Simitis yesterday and briefed him on the international and local economy. «What we are experiencing these days, internationally and especially in our country, is an inverted bubble, a negative bubble, where speculators are trying to profit on the possibility of a further slide in the market,» Christodoulakis said. «It is absolutely clear that the market’s current levels do not do justice to the economy.» He said he had instructed the authorities to investigate whether any illegal activities had taken place on the market. «What is essential though, is that we deal with whatever problems the international economy has… without panic.»