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Greek banks lay off 10,000 employees and sell their assets in the Balkans

13 November 2015 / 14:11:35  GRReporter
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Greek banks will have to cut 10,000 employees in implementation of the agreement reached between the government and creditors, as reported by the Greek online edition

One in four bank employees will lose their jobs over the next two years. The plan also provides for closures of bank branches and sales of Greek bank assets abroad.

The cuts of 10,000 people only apply to bank employees in Greece, which now number 42,000. According to the publication, creditors raised the specific question in the first memorandum and now they are laying it down as a condition for the third bank recapitalisation.

The author of the article comments that the measure aims to reduce costs, whereas the real problem of the Greek banking system is its expansion and the resulting lack of competition. According to him, a government that has a position on the economy and strategy for the future would insist on breaking the sector into smaller banks and on increased competition between them. In this case, the cuts would not be its main priority.

The contraction of the Greek banking sector was one of the first proposals that creditors had put on the negotiating table, its objective goal being to reduce Greece's political influence in its neighbouring countries. "It was clear that the leadership of the Greek banking system in the Balkans was "irritating," he states.

In his words, the arising problem is that, through the mandatory sale of subsidiary banks in neighbouring countries, Greek banks will automatically lose the ability to recover and to transfer their profits in Greece, in view of the fact that the countries in questions are in a process of recovery. At the same time, the cost of return of Greek banks in their markets in the future will be beyond their abilities, especially compared with the "revenue" that banks will receive upon leaving them today.

According to the analysts, the explicit agreement between creditors and the government on the recapitalisation of the four systemic banks will lead to the completion of negotiations on the settlement of non-performing bank loans (loans in the red) before Sunday. Government sources in Athens stated that delays regarding this issue would be impossible in the present situation since the procedure of bank recapitalisation would be the most important catalyst for the events in the coming days.

Greek banks’ book-buildings must be closed while ensuring that the first monitoring of the third rescue programme will end in normal conditions and strictly within the predetermined period. This cannot happen if during its Sunday meeting the Euroworking Group does not approve the financing of the Financial Stability Fund with the amount of 10 billion euro that has been set aside in a special fund of the European Stability Mechanism (ESM).

Under these circumstances, the negotiations on the settlement of loans in the red should be considered completed with regard to housing loans. In this way, a house could be confiscated and sold at auction if the property value amounts to 150,000 euro and the income of the owner is 25-27,000 euro per year.

Before putting the procedure into force, banks will use all possible means to reach an agreement with the owners to gradually repay the loans so that they can be removed from the category of non-performing loans.

It is believed that these measures combined with the new conditions for auctions of properties will allow the reduction of additional conditions, as the refusal of loan recipients to take advantage of them will make a clear difference between those who actually have problems paying their loans and those who can pay their loans but do not want to.

Tags: EconomicsMarketsRecapitalisation of Greek banksLayoffs of bank employeesSale of Greek bank assets in the Balkans
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