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Nobody can know that number exactly. Indeed, due to the economic downturn and the decline of banking activity, the sector as a whole is likely to shrink. Whether there will be layoffs due to mergers of banks depends on the policy each institution will apply separately.

Currently, the merger of Eurobank and the National Bank of Greece (NBG) is underway. Will such a merger follow for their subsidiary banks in Bulgaria - Post Bank and United Bulgarian Bank?

I'm not the expert who can answer this question. Do not forget, the merger of parent banks will take time.

Why did EFG and Eurobank split this year?

Eurobank was a member of the EFG Group until the summer. At the same time, Greece was a serious risk to any foreign investor. Although the shareholders remain the same (the whole Latsis family), the share capital has been distributed among several family shareholders. In this way, the obligations of the group to the supervisors are different and, more important, while the shareholders remain the same, the developments in the Greek economy cannot affect the corporate group as a whole outside Greece.

Other major foreign investors - mainly French banks such as BNP Paribas, Société Générale and Crédit Agricole withdrew from the Greek banking market. Why did they leave Greece and how will it affect the local financial market?

I think that French banks left because they failed to become profitable while they were in the Greek banking market. I do not know whether it was because they had not sent the right people here to achieve the goals set or because they did not hire the correct local staff who knew the Greek market well. In any case, since the French banks failed to realize profits in the good times of the Greek economy, there is no way for them to manage to do so in this period. For the Greek market, the withdrawal of French banks is insignificant too because while they were here they did not expand to become major players.  After their departure, local banks are getting slightly bigger.

The recapitalization of banks has been postponed and it is expected to take place in April 2013 instead of this autumn. Why is that?

Before banks can be recapitalized, Europeans have to release the funds and for them to release the funds, they required that the three-year programme 2013-2016 were approved by the Greek Parliament. The elections delayed the process.

Will the state have a voting right in the management of banks after their recapitalization?

The Hellenic Financial Stability Fund (HFSF) will hold ordinary shares and it will have the right to vote in strategic decisions that are important to the banks. Since last year, the Troika has been insisting that the State should stay away from the day-to-day management of banks. In such decisions, the public sector is represented by the HFSF. It does not have a voting right when it comes to issues relating to staff management or to decisions on a monthly or quarterly basis. The state will give this freedom to those banks that are able to raise from the market 10% of the funds required to fulfil the capital adequacy criteria. Commissioners approved from the government and the Troika will be appointed to the Board of Directors of each bank to monitor the implementation of the restructuring plans and the use of the State’s and Troika’s funds.

The Troika has set a condition to distinguish between healthy and other banks, assuming that the market will invest in these healthy banks.  They imposed the 10% rule.  The problem with the 10% rule is that banks in the European market are traded at half their book value. This makes it very difficult for new investors to decide to participate in the capital increase of Greek banks because they are likely to lose a significant amount of their investment almost immediately. The problem was discovered in March this year. Investors would, however, be willing to bear the immediate losses after the capital increase, only if they are given sufficient teasers, like cheap warrants to be able to buy back the rest of the stocks later on.

In the end, will banks independent of the state remain in Greece?

The banking sector is a successful example in the modern economic history of Greece and I think it will be able to return to private hands.  After all, Greek bankers are among the best in Europe.  Today, the recapitalization comes from European funds.  Thus for a while, Europeans will keep an eye on the banks.  They have already spelled out that banks cannot easily finance political parties.  The 10% participation rule is supposed to prevent politicians from using banks for their close political/party interests.

Don’t lenders trust the banking supervision in the country, which is to protect the financial institutions from the interference of political interests?