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Eurobank to be nationalized

23 April 2013 / 20:04:45  GRReporter
3308 reads

The Greek Financial Stability Fund undertakes the full recapitalization of Eurobank. The funds for the banks are part of the aid to Greece from Europe and the International Monetary Fund. Eurobank failed to raise the required 10% of private capital, which has led to to it needing to be rescued with public funds and it will become the first bank nationalized as a result of the financial crisis. By 30 April, the bank has to receive 5.8 billion euro in financial aid.

The official announcement of the financial institution confirms this information and the recapitalization process will be completed next week. Then, the board will draw up a concrete business plan to attract private capital. International consultants in the process of attracting new private investment will be Barclays Bank plc and Deutsche Bank. "The deposits in Eurobank are fully guaranteed," bankers assure and state that Greek depositors should not worry that the deposits will be cut as happened in Cyprus.

However, the problem with the present shareholders has not been resolved. The National Bank of Greece currently holds 85% of the share capital of Eurobank. The merger between the two institutions was postponed late last month and the question of its future remains unclear at present. Sources in the finance ministry do not preclude that the two banks may merge after the completion of the recapitalization process in Greece.

Another scenario under consideration is that after absorbing the aid capital, Eurobank will be able to take over some of the smaller local banks under the consolidation plan of the Greek banking sector. Whatever measures are taken, Eurobank has to find new strategic investors to support its long-term plans for the funding of the real economy.

The worst scenario that has not been discussed in public is for the capital of the Greek Financial Stability Fund to be insufficient for the survival of the bank. Then, the government can resort to the already proven formula of dividing the bank into a "bad" and a "good" part, which would be the end of the recently well-known financial institution.  All stable assets, deposits and regular repayments of debts may be included in the "good" part and the rest may be subject to liquidation.

The bank management states that all decisions taken are intended to protect the interests of the employees who are one of the main assets of the institution.

Unconfirmed information indicates that banker Spiros Latsis (EFG), who is the former owner of Eurobank and is believed to be the richest Greek, is not ready to completely withdraw from the financial market of Greece. The reform of the financial system has shown that there are a few small but stable banks in the country, which have withstood the financial crisis and managed to keep afloat despite the difficulties. One of them is Attica Bank, which has provided from private investors the 200 million euro required for the recapitalization alone and which is in excellent condition. Information suggests that it may be an attractive bite for Latsis and the door to his return into the financial circles in Greece.

Tags: EconomyCompaniesEurobankNationalizationFinancial crisisGreece
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