State could lose all of its in­vest­ment in banks

Kathimerini English - - Focus - BY YIANNIS PAPADOYIANNIS

The Greek state is close to los­ing the 25 bil­lion eu­ros it paid to save the Greek bank­ing sys­tem, as the bank war­rants is­sued dur­ing the first re­cap­i­tal­iza­tion will ex­pire at the end of 2017.

This is money the state had bor­rowed for the banks’ share cap­i­tal in­creases with the aim of re­cov­er­ing at least a large part of it while re­duc­ing the na­tional debt once the cri­sis was over and the banks were re­turned to pri­vate hands.

In fact, all was lost in the sum­mer of 2015, when the coun­try was one step from its ex­pul­sion from the eu­ro­zone. Un­der se­lec­tive de­fault con­di­tions, banks were forced to con­duct share cap­i­tal in­creases at prices of just a few cents: Al­pha at 0.04 eu­ros, Na­tional at 0.02 eu­ros, Eurobank at 0.01 eu­ros and Pi­raeus at 0.003 eu­ros.

These cap­i­tal in­creases were mostly cov­ered by for­eign hedge funds that took over the Greek bank­ing sys­tem, shrink­ing the hold­ings of the pre­vi­ous share­hold­ers – mainly the Greek state.

Af­ter the third re­cap­i­tal­iza­tion the banks pro­ceeded to a re­verse split, re­duc­ing the num­ber of their shares, and the prices of their war­rants were ad­justed ac­cord­ingly.

Re­call that in the sum­mer of 2014, when the stock value of the four sys­temic banks amounted to 33.4 bil­lion eu­ros, there was an initiative by the ad­min­is­tra­tion of the bank bailout fund (HFSF) for the faster sale to in­vestors through war­rants, so that the state could re­cover sev­eral bil­lion eu­ros.

How­ever, that plan was ham­pered by the strong po­lit­i­cal op­po­si­tion, mainly SYRIZA, now the leader of the coali­tion gov­ern­ment.

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