SSM weighs in on National-HFSF clash

Frankfurt calls on Fund to avoid calling a general meeting as that would escalate the crisis at the bank

The European Central Bank’s Single Supervisory Mechanism (SSM) waded into the rift between National and bank bailout fund HFSF yesterday, saying in a letter that an extraordinary general meeting – that the HFSF wants to call – would lead to a further escalation of the crisis.

The letter constitutes an advisory opinion and is not binding on the Hellenic Financial Stability Fund; however, this is a significant intervention on the matter of the appointment of the new National Bank president, as the SSM is the monitoring body of the bank’s regulator, the ECB.

The HFSF, which yesterday had a board meeting to discuss the situation at NBG, is examining all its options, including calling an NBG general meeting given that it is the lender’s main shareholder. It seems that there can be no rapprochement between the HFSF and the NBG board without any significant backtracking on the part of the bank.

Last week, following the intervention by Deputy Prime Minister Yiannis Dragasakis, rumors spoke of the upcoming resignation of National’s chief executive officer, Leonidas Fragkiadakis. NBG sources rule this out, and yesterday Fragkiadakis told a meeting of senior National officials that the bank “requires normality when we have so many open issues. The ambition of our restructuring plan currently makes it essential that we are on good terms with all parties involved, first of all with our shareholders and our regulators.”

“Our intention after all this is for us to emerge united so that things can improve. We will therefore take some initiatives toward smoothing relations with the Fund. There was no intention for a rift with the HFSF,” Fragkiadakis reportedly said.

HFSF sources, on the other hand, dispute the claims about the NBG having had no intention of causing rift, stressing that it was National’s moves that have complicated things, leaving little room for any painless solutions. Kathimerini understands that there are people at the Fund in favor of taking a hard stance toward National, but not all HFSF council members agree.

Sources from the Bank of Greece – on the same wavelength as the SSM – say that any action that could lead to an escalation of the crisis ought to be avoided as this could have serious implications for National.