Gov’t aims high on bank re­cap

State wants to at­tract in­vestors to share cap­i­tal in­creases while se­cur­ing in­creased rights for its own shares

Kathimerini English - - Focus - BY YIAN­NIS PAPADOYIANNIS

The gov­ern­ment will ta­ble its draft law on the re­cap­i­tal­iza­tion of do­mes­tic banks in Par­lia­ment by the end of this week, or next week at the lat­est, af­ter it has been ex­am­ined in de­tailed by the coun­try’s cred­i­tors.

In any case, the bill will have to be voted be­fore the pub­li­ca­tion of the banks’ stress test re­sults, ex- pected by Oc­to­ber 31. Sources close to the ne­go­ti­a­tions say that the gov­ern­ment and the cred­i­tors’ mis­sion chiefs will have to reach an agree­ment on the fi­nal text by the end of the week so that it is ap­proved by Par­lia­ment be­fore the re­sults are out.

The gov­ern­ment ap­pears to be con­cerned about the state’s hold­ing in the banks: It is seek­ing not only to en­sure a siz­able stake so as to avoid the losses that a ma­jor re- duc­tion in its hold­ings in fa­vor of pri­vate in­vestors would en­tail, but also to make sure that the state’s stake is in shares with in­creased rights.

An­a­lysts note that the par­tic­i­pa­tion of the pri­vate sec­tor and the in­creased rights in the state’s shares are two con­flict­ing tar­gets and stress that the gov­ern­ment will have to clar­ify its in­ten­tions quickly and ac­cel­er­ate pro­ce­dures as there has al­ready been a se­ri­ous de­lay which could put the timely com­ple­tion of the re­cap­i­tal­iza­tion in doubt.

Bank sources add that the is­sue of the ma­jor re­duc­tion in the value of the state’s hold­ings is in­deed im­por­tant and that there are some al­ter­na­tive so­lu­tions for the max­i­miza­tion of the value of the gov­ern­ment’s stake in banks. How­ever, they note that this can­not be done by way of an in­crease in the state’s con­trol on banks.



Bank of­fi­cials stress that the le­gal frame­work will need to be clar­i­fied rapidly so that banks can start fo­cus­ing on at­tract­ing in­vestors. They re­port a strong in­ter­est by for­eign in­vestors in par­tic­i­pat­ing in the banks’ share cap­i­tal in­creases, pro­vided that the frame­work is clear, the terms at­trac­tive and that the gov­ern­ment con­firms its de­ter­mi­na­tion to im­ple­ment the bailout agree­ment through the on­go­ing re­view by the cred­i­tors.

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