HFSF ve­toes banks’ cap­i­tal in­crease

Fund shoots down any ideas of see­ing its stake in sys­temic lenders squeezed as it would in­cur losses

Kathimerini English - - Focus - BY GIOR­GOS MANTELAS

Talk among Greek bankers for a pos­si­ble share cap­i­tal in­crease that would re­duce the state’s stake in the coun­try’s four sys­temic lenders, com­ing in the wake of suc­cess­ful stress tests, has been met with a re­sound­ing “no” by the bank bailout fund (HFSF).

In the days after the Euro­pean Cen­tral Bank re­vealed that the cap­i­tal re­quire­ments of the coun­try’s main banks are vir­tu­ally zero, Greek bankers be­gan ex­plor­ing strate­gies to re­turn the credit sec­tor to pri­vate hands, which could only be achieved by squeez­ing the con­trol­ling stake of the Hel­lenic Fi­nan­cial Sta­bil­ity Fund in Na­tional, Al­pha, Pi­raeus and Eurobank.

The HFSF, how­ever, has quashed such plans for the time be­ing and with good rea­son: With the stock prices of the four lenders at cur­rent low lev­els, the state could not pos­si­bly con­sent to a share cap­i­tal in­crease that would en­tail losses to the HFSF’s port­fo­lio.

Ex­perts fol­low­ing de­vel­op­ments on this front say that no big news should be ex­pected on the is­sue in the next four to six months, ar­gu­ing that po­lit­i­cal de- vel­op­ments in the com­ing months are bound to play a key role: the pos­si­bil­ity of early elec­tions in March in the event that Par­lia­ment fails to elect a new pres­i­dent will af­fect the over­all sit­u­a­tion and stock prices in par­tic­u­lar, whereas things will be much dif­fer­ent if snap polls are avoided.

At least the other bat­tle on the credit sys­tem front, cen­tered on dis­cus­sions in the last eight months over whether it re­quires any fur­ther strength­en­ing, ap­pears over as the ECB stress tests have shown that the do­mes­tic lenders are se­cure even in ex­treme credit con­di­tions.

This de­vel­op­ment, com­bined with the ECB un­der­tak­ing di­rectly the role of mon­i­tor­ing au­thor­ity for all Euro­pean credit in­sti­tu­tions, re­plac­ing na­tional cen­tral banks, is ex­pected to im­prove the pro­file of Greek lenders fur­ther, mainly in the eyes of their clients­de­pos­i­tors.

The specter of another cap­i­tal flight – after the loss of over 70 mil­lion euros from the lo­cal credit sys­tem from 2010 to 2012 – re­mains ever-present but the sec­tor just has to learn to live with it. At the same time, banks are plan­ning their fu­tures, vary­ing from lender to lender. What they will have in common though is ef­forts to re­form the coun­try’s business land­scape, con­ducted partly through the re­struc­tur­ing of cor­po­rate loans.

Another common point will be the banks’ con­tri­bu­tion in the econ­omy’s re­turn to growth, as long as the state also plays an ac­tive role in that ef­fort. For in­stance, bank of­fi­cials warn that if the rules gov­ern­ing cor­po­rate bank­rupt­cies re­main on pa­per, no se­ri­ous ini­tia­tives can be taken to re­struc­ture Greece’s var­i­ous business sec­tors and sep­a­rate the healthy and sus­tain­able com­pa­nies from those that are doomed.

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