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Canadian Warren Buffett invests in NBG

14 March 2013 / 23:03:10  GRReporter
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The Canadian investment fund Fairfax Financial Holdings has announced its interest in buying shares of the largest commercial bank in the country, namely the National Bank of Greece (NBG). The news came a day after the investment fund of Qatar announced its interest in buying NBG’s subsidiary in Turkey, Finansbank, for five billion euro and in taking part in the recapitalization of the Greek bank with an additional one billion euro.

The Canadian fund has expressed an interest in covering the 10% recapitalization rate of NBG, which will prevent the bank from being nationalised. Ethnos newspaper reports that the fund wanted changes in the recapitalization process of the particular bank without making it clear what opportunities the financial giant requested. Finance Minister Yiannis Stournaras quickly responded to the signal. He said that the recapitalization of the Greek financial system would be implemented in accordance with the lawful means established in the country. Local analysts claim that at this stage, the government is not ready to make concessions even to the big players and that the process that will recover the banks cannot be protracted after the end of May this year.

Fairfax Financial Holdings manages 37 billion euro and its founder and head is Prem Watsa. The company is headquartered in Ontario, Canada, and Wikipedia calls its owner, who is of Indian origin, the "Canadian Warren Buffett". He has gained that name mainly because of his successful investments.

After making an inquiry to the Stock Exchanges and Securities Agency, NBG’s administration confirmed that it has received an offer from Fairfax Financial Holdings. According to banking analysts, NBG needs 17.5 billion euro to meet the capital adequacy ratio required by the supervising authorities. This means that 15.6 billion euro will come from the Fund for Financial Support, which operates with funds drawn from the euro zone, and two billion euro will come from private investors. The unofficial information to date suggests that the Canadian fund is ready to invest 1.5 billion euro in the Greek bank.

The total amount that the European Union and the International Monetary Fund have allocated to save the Greek financial system is 27.5 billion euro. In order for the banks to avoid being nationalized, they have to find private investors to buy at least 10% of the newly issued shares.

Although the Vice President of Fairfax, Paul Rivett, declines to comment on the announced interest in NBG, he stresses before Reuters that the international investment fund has a strong interest in the process of recapitalization of European banks. "We've demonstrated that we will participate in recapitalization, we've done that with the Bank of Ireland, which has turned out to be a tremendously successful investment with a great bank," Rivett told Reuters cited by CNBC.

Tags: EconomyMarketsNBGRecapitalizationNationalizationCrisisGreece
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