FinancialMirror.com
January 1 - 8, 2013
GREECE | 25
Top 4 banks need €27.5 bln for recap Greece’s central bank said the country’s four biggest banks need 27.5 bln euros of fresh capital to restore their solvency ratios. Battered by the country’s debt crisis and a protracted recession, banks suffered heavy losses from a sovereign debt swap in March while their loan portfolios continue to be pounded by rising credit impairments. At stake is whether National Bank, Eurobank, Alpha and Piraeus will remain privately run or end up nationalised. International lenders have earmarked 50 bln euros from the country’s 130 bln euro bailout to recapitalise the four systemically important banks and wind down others deemed not viable. Under the plan, banks will have to issue new common shares to achieve a core Tier 1 capital solvency ratio of at least 6% and contingent convertible bonds or CoCos to boost the ratio to 9%. The key element in the recapitalisation scheme is that the private sector must take up at least 10% of the new shares issued to keep the lenders privately run. Authorities have set up a capital backstop, the Hellenic Financial Stability Fund (HFSF), which will inject most of the capital in the recapitalisation. It is funded from the country’s bailout package.
RECAP FUNDS SUFFICIENT In a long-awaited report, the Bank of Greece said capital needs for all of the country’s 14 commercial banks came to 40.5 bln euros.
Of that sum, 27.5 bln or about 14.5% of this year’s GDP, corresponded to the needs of the big four. The Bank of Greece said the 50 bln euro financial envelope earmarked to recapitalise and resolve non-viable banks over the 201214 period was adequate. “The recapitalisation of Greek banks and the restructuring of the sector are expected to gradually restore depositors’ and market confidence,” the central bank said. The central bank’s assessment was based on two macroeconomic scenarios - a baseline that set a core Tier 1 ratio target of 9% for 2012 and 10% for 2013-14 and an adverse one setting a target ratio of 7% for the period. The timetable for the recapitalisation of the big four calls for completion of CoCo issues by the end of January 2013. The contingent convertible bonds will be fully underwritten by the HFSF fund. Banks’ rights issues must be completed by the end of April. The central bank also released the findings of a diagnostic study on bank loan portfolios by BlacRock Solutions. The firm was commissioned to ascertain potential credit losses during the three-year period caused by the deep recession. BlacRock looked at 223.4 bln euros of loans at 16 banks covering mortgages, credit card, consumer and business credit. It projected credit losses would reach 26.6 bln euros under the baseline scenario and hit 34.8 bln under an adverse outlook.
The BoG provided the following capital (CTI) needs for the period December 2011 to December 2014 per bank: 8. Millennium: 399 mln; 1. NBG: EUR 9.756 bln; 281 mln; 5.839 bln; 9. Geniki Bank: 2. Eurobank: 10. Attica Bank: 396 mln; 3. Alpha Bank: 4.571 bln; 11. Probank: 282 mln; 4. Piraeus Bank: 7.335 bln; 12. New Proton Bank: 305 mln; 5. Emporiki Bank: 2.475 bln; 168 mln; 13. FBB: 6. Hellenic Postbank: 3.737 bln; 14. Panellinia Bank: 78 mln. 7. ATEbank: 4.920 bln;
Hellenic Inv Fund to opt for Luxembourg SICAV The Development Ministry is planning to establish a new entity that will operate as an investment company of variable capital (known by its French acronym SICAV), which will be based in Luxembourg and its management will be appointed by the investors/shareholders and not by the Greek state, according to a report in Kathimerini. The Hellenic Investment Fund, to be created along the lines of a special committee report issued in October 2012, may not be restricted to investing in holdings with an aim to aid growth in the country, but could also issue direct loans to candidate investors in order to
finance major projects in Greece. The Kathimerini report notes that the decision on the exact character of the fund will be made later. Moreover, press reports suggest that Ministry officials who have undertaken the preliminary work for the establishment of the fund attribute great significance to its operation being based on private economy criteria; given that it is seen as crucial that this new institution gain the confidence of private investors. Nevertheless, it appears so far to have failed to obtain the support of foreign institutional investors, as they believe that it could reduce their level of
intervention in the country’s economy. Press add that it also remains unclear how the initial financing of the fund will be implemented, as neither the national budget’s Public Investment Program nor the EU-subsidised National Strategic Reference Framework are considered to be appropriate funding sources. According to Kathimerini, it is likely that funds for the initial financing amounting to EUR 500 mln have been found and will come from the state and not from private investors. However, as the Greek state will be a shareholder, it will have some say in the composition of the board.
Crackdown on tax evaders is failing
Tourism scam uncovered, looks for unaccounted millions Three persons were arrested on suspicion of trying to defraud the national tourism board, police said on Saturday, and the finance ministry is investigating a suspected 12-mln-euro hole in the state agency’s books. Tourism is one of cash-strapped Greece’s few remaining moneyspinners and the EOT tourism board is in charge of funding several promotion campaigns and subsidy programmes for the industry. A police statement said a former EOT adviser colluded with at least two accomplices to cash in a forged cheque of 147,000 euros made out to a hotel on the Aegean island of Syros. The three, arrested earlier this week, were put in pre-trial detention after appearing before a prosecutor on Friday. “They are charged with forming and participating in a criminal organisation,” the statement said. The tourism ministry said it was investigating why an EOT chequebook was handled by the 39-year old adviser, who was not a career EOT official but rather an aide to the board’s outgoing secretary general, who resigned last week. Separately, the finance ministry appointed on Thursday a team to investigate what the EOT’s new secretary general has called “accounting irregularities” of 12 mln euros in the EOT’s books. Cronyism, political meddling and lack of accountability are central causes for the endemic corruption that has bedevilled Greece, leading to fiscal profligacy, financial crisis and an international bailout in 2010. Greece ranked last among the 27 European Union countries in a global corruption index compiled by anti-graft group Transparency International earlier this year. The country’s governing coalition, which took power in June, has pledged to crack down on corruption, which infuriates citizens who have seen their wages cut and taxes increased as part of its 240-bln euro bailout.
More than two-thirds of Greeks say their government is failing to fight tax evasion, a poll showed on Saturday, a major focus of popular discontent along with austerity measures imposed to unlock bailout aid. Almost 68% of respondents in a Kapa Research/To Vima poll said the ruling coalition of conservative Prime Minister Antonis Samaras was not doing enough to catch tax dodgers. The poll was taken on December 20-21, a week before prosecutors said that the names of relatives of former finance minister, George Papaconstantinou, had been removed from a list of 2,062 possible tax cheats with Swiss bank accounts. Papaconstantinou, who negotiated Greece’s first EU/IMF bailout in 2010, has denied tampering with the list. He is facing a parliamentary investigation, a first step under Greek law to possibly stripping him of his immunity as a former cabinet member. In the poll, the main opposition Syriza party led
Samaras’s New Democracy by 22.6% to 21.5%. Socialist PASOK, the three-party coalition’s second-biggest member which ejected Papaconstantinou from its ranks on Friday, scored 6.2% - about half its election score in June. The latest 49 bln euros in bailout funds Samaras secured on December 13 failed to impress voters. Almost 71% said they were no more optimistic after Europe’s decision to keep bankrolling their country. However, 59% said the government should be given more time - more than twice as many as the 28% who wanted immediate elections - and about 46% said Samaras was a more suitable prime minister than opposition leader Alexis Tsipras, head of leftist, anti-austerity Syriza. About 77% of respondents said Greece should remain in the euro and just 16% backed a return to the country’s national currency, the drachma.
‘Lagarde List’ altered to cover names l
Papaconstantinou relatives removed from possible tax dodgers list
The government has backed calls for a parliamentary probe into former finance minister George Papaconstantinou after prosecutors found that names of his relatives had been deleted from a list of possible tax cheats he handled when in office. Papaconstantinou, 51, who negotiated Greece’s first international bailout in 2010, denied he changed the list after receiving it from French authorities two years ago, saying he was not aware any family members were on it. The revelation adds a new twist to a case that has infuriated austerity-struck Greeks, angry at the government’s failure to crack down on the tax evasion that has contributed to the country’s financial crisis. The original list included the names of three people with family ties to Papaconstantinou who were later removed, as Greek officials confirmed when they received a fresh copy of the list, one court official said on condition of anonymity. “It was altered by Greek hands,” the official said but did not say who might have been responsible for the change.
A second court official confirmed the information. Both said the fact that the names were on the list did not mean the account holders had done anything illegal. Papaconstantinou issued a statement strongly denying he tampered with the list. “I have in no way tampered with the evidence,” said the former socialist minister. “If there are any accounts on the list concerning members of my wider family, I did not know this until today... I will not be turned into a scapegoat in this case.” But Papaconstantinou’s own Socialist PASOK party expelled him from its ranks, saying he had mishandled the case. “An obvious and enormous issue of responsibility arises for Mr. Papaconstantinou, who handled the issue in the worst possible way,” said PASOK in a statement on Friday. “It is clear that Mr. Papaconstantinou is no longer part of PASOK”. The co-ruling Democratic Left party, the junior partner in Greece’s three-party coalition, requested a parliamentary probe into Papaconstantinou.