The Best of GRReporter
flag_bg flag_gr flag_gb

Banks continue to seek investors, the airport in Athens has already found one

08 May 2013 / 15:05:58  GRReporter
3499 reads

The banking sector has remained at the epicentre of the Greek financial crisis although the situation in the country has stabilized. The Greek banks will continue the feverish reform until the end of the year in order for them to avoid another turmoil in the future.

The first condition that will enable Greece to receive the next tranche of six billion euro is for the capital adequacy ratio of the three largest commercial banks (Alpha bank, Piraeus Bank and the National Bank of Greece - NBG) to reach 9%. The banks must announce this month their plans to increase the share capital. The increase in the share capital of the large banks and the restructuring of the small financial institutions have to be completed in June. This means that smaller banks will have to obtain funds from the open market alone or that they will have to merge with other big banks.

By the end of July, the Greek banks have to submit their restructuring plans to the competition commission for it to approve them. The banks that are planning to merge and acquire other financial institutions have to present the plans for approval by the supervising authority, namely the central bank of Greece, during the same period. It is not excluded that the merger of Eurobank with the National Bank of Greece might be revised in this period as well.

Before the beginning of August, the state Postbank (TT) will also undergo a metamorphosis, as it will be divided into a "good" and a "bad" part. Its healthy assets and performing loans will form a new financial institution whereas the rest will be subject to liquidation.Before the beginning of August, the state Postbank (TT) will also undergo a metamorphosis, as it will be divided into a "good" and a "bad" part. Its healthy assets and performing loans will form a new financial institution whereas the rest will be subject to liquidation.

During the same period, the government should have developed the new strategy for the development of the banking sector and created new prerequisites for attracting fresh private capital from abroad as reported by Ethnos.

By the end of December, Greek banks have to undergo another stress test to make it clear whether the recapitalization and reforms in the financial system have healed the banking sector, which has been deeply affected by the crisis. The course of loans in the red is the main factor that will determine the needs for additional funds for the banking system. The results of the stress test will show whether the competent authorities of the European Commission, the European Central Bank and the International Monetary Fund will increase the aid to meet the capital requirements of the Greek banks.

One of the biggest problems remains the increasing number of outstanding loans to households and businesses. The latest estimates of economic analysts could reach 40% of the total loans granted to date. Naftemporiki reports that the loans in the red have amounted to 55 billion. This means that a new deferred payment has been agreed in approximately one out of four loans. The problem with consumer loans is the most serious, as 40% of the borrowers experience difficulties in repaying them whereas 22% of housing loans cannot be serviced regularly.

While the regrouping in the banking sector continues and the investor interest in this area is low, things in other sectors of the economy are progressing better. After the government has successfully completed the first major deal of the privatization programme with the sale of 33% of the state lottery OPAP, another foreign investor has turned to Greece, namely the Canadian pension fund PSP Investments, which has bought the share (26.7%) of the German company Hochtief in "Eleftherios Venizelos" airport in Athens.
PSP Investments (the Public Sector Pension Investment Board of Canada) is one of the largest pension funds in Canada, which, according to data from March 2012, manages about $ 65 billion, has an average annual return of 12.7% and is state-controlled. It includes the pension funds of the public administration, the military and the Royal Canadian Mounted Police.

The Greek press reports that the Fund invests in private equity in international markets and in real estate. In Canada, the fund holds shares in Canadian Natural Resources Ltd (natural deposits), The Canadian National Railway Co. (railways), Goldcorp Inc., Barrick Gold Corp and Barrick Gold Corp (gold mining), The Royal Bank of Canada, The Toronto-Dominion Bank and The Bank of Nova Scotia (financial sector), BCE Inc. and Telesat Holdings – a private company (telecommunications). In addition, PSP Investments holds shares in Revera (real estate), in the Norwegian In-frafas Norge AS, Trancelec (electricity production), in the Australian logistics and infrastructure development company DP World and in the Canadian timber company Timberwest Forest Corp.

The airport in Athens remains state owned as 55% of it belongs to the public property management fund, which is part of the local privatization agency. Despite the crisis, the company is profitable. In 2012, its pre-tax profits amounted to 130 million euro; the airport serves 110 destinations and 53 airlines. The government is planning to offer in September 2013 the total 55% share in the Athens airport as a continuation of the privatization programme. So far, two Chinese funds, namely Shenzhen Airport and Friedmann Pacific Asset Management that want to enter the Greek market, have demonstrated their strong interest in the deal.

Tags: EconomyCompaniesBanksRecapitalizationAthens airport
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
You can support us only once as well.
blog comments powered by Disqus