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According to the National Bank of Greece, the voluntary redundancy programme has been completed successfully.

As mentioned in an announcement by the Bank, salary costs of nearly 150 million euro on an annual basis have been saved due to the Programme.

"Thanks to both the measures taken and the even distribution of employees in all departments of the bank involved in the programme, customer services will continue seamlessly," continued the announcement.

The National Bank has reported that following the agreement on the exercise of warrants, including partial shares, 31.046 warrants on shares issued by the bank and owned by the Financial Stability Fund have been exercised.

Exercised warrants correspond to 255.410 ordinary shares or 0.011% of the total share capital with a corresponding increase of shares in circulation. The amount contributed by people who have exercised these warrants to the Financial Stability Fund amounted to 1,117,750.75 euro.

Following all this, issued warrants which remain valid already amount to 245,748,580 euro.

The situation in Turkey

The management of the National Bank is closely monitoring the rapid development of political events in Turkey. The Greek group is present on the Turkish market via its subsidiary Finansbank, which is also its most profitable investment. Following losses due to the depreciation of the Turkish lira, the unexpected increase in interest rates and changes in the regulatory framework governing the functioning of the banking system, which limited the net profit of banks, the risk of destabilization in the region because of scandals involving ministers and senior government officials, which have affected even Prime Minister Recep Tayyip Erdogan, have caused additional difficulties.

"We believe that the effects of the restrictive monetary policy, which the Central Bank of Turkey applies, are short-term," stated the National Bank of Greece, adding that "losses resulting from changes in the exchange rate of the Turkish lira to the euro have been only in terms of accounting so far."

A prerequisite - political stability

As the Bank explained, "there would be a problem for the National Bank of Greece only if we act too hastily in order to turn part of our investment in Turkey into liquidity," and it added that "the business plan submitted to the Bank of Greece and the European Commission is not binding with respect to time for the sale of a package of shares, and we might have to wait until as late as 2017 in order to achieve the best possible price."

As for the turmoil caused by government scandals, the Bank stressed that political stability is essential in any case for the normal course of the economy, and hence of the banking sector.

The main event which affected the results of Finansbank for the third quarter of 2013 was the sharp increase in interest rates by the Turkish monetary authority which did not give banks the time needed in order to change the pricing conditions of their loans. As a result, within a quarter, the interest margin for the Turkish subsidiary bank fell by 721 to 591 basis points, while net interest incomes declined by 72 million euro on a quarterly basis, or 43 million euro on an annual basis.

A strong capital base

Despite these difficulties, however, the Turkish subsidiary bank remained a major source of profits for the National Bank of Greece even in 2013, offsetting losses recorded on the internal market and in the region of Southeast Europe.

For the first nine months of the year, the net profit of Finansbank amounted to 412 million euro – a 9% increase on an annual basis at constant exchange rates.

During the third quarter, difficulties in the monetary environment affected the financial results. In particular, the net profit reached 220 million Turkish lira, marking a 33% drop on an annual basis.

The strong capital base of Finansbank is an important advantage of the National Bank of Greece. The overall capital adequacy ratio (CAR) reached 18.0%, which is the highest ratio compared to its main competitors, despite the significant correction in the price of Turkish bonds. Moreover Finansbank has long had the lowest exposure in government securities compared to all other Turkish banks, a fact that protects it in case of a possible financial crisis.

The situation regarding Eurobank

"Eurobank’s return in the private sector would be a strong sign of confidence in the prospects of Greece and its economy", emphasized Executive Director of the group Christos Megalou. He expressed optimism that a capital increase will be achieved which will attract private capital and international investors.

On the occasion of the completion of the merger with the New TT Hellenic Postbank, which has strengthened the systemic role of Eurobank, as stated by Christos Megalou, the head of the group addressed the 20 thousand employees in Greece and another 7 countries, noting that new prospects for the group’s shareholders, customers and employees are being opened.

In particular, the legal merger of Eurobank and the New TT Hellenic Postbank was completed on Friday. As stated in a message "on 27 December 2013, the legal merger of Eurobank Ergasias JSC with the banking company "New TT Hellenic Postbank" was completed with the entry in the commercial register of Central decision № Κ2-7651/27.12.2013 of the Ministry of Development and Competitiveness, which had approved the merger."

At the same time it was announced that former CEO of the New TT Hellenic Postbank Harris Siganos has been appointed director of operations, technology and organization of Eurobank, as well as a member of its management committee, and of its executive committee.

Recognising the historical role, importance and special relationship developed by TT Hellenic Postbank with Greek depositors across the country,  Christos Megalou emphasized that Eurobank will keep the network of branches under the trade name New TT Hellenic Postbank, adding that the effect of the merger will not be cumulative but multiplying.

In April - the final merger

Executive Director of Eurobank Christos Megalou also said that the final functional merger of Eurobank and the New TT Hellenic Postbank, which was scheduled for April 2014, would be completed on time, as was done in terms of the legal merger, and all activities for the acquisition of the new Proton Bank.

In a review of the events of the past six months, Christos Megalou stressed that the merger of Eurobank with the New TT Hellenic Postbank and Proton Bank guaranteed the systemic role of the group and activated the dynamic development of the bank which has made a significant rationalization of costs. These mergers also made the way for the change of the Transformation Programme of the bank, allowing it to adapt to the demands of the future in time. The Executive Director of Εurobank paid particular attention to the privatization procedure, about which, as he mentioned, there are positive expectations.

The privatization of Eurobank

The privatization of Eurobank, together with the assessment of banks by BlackRock, are the next major challenges facing the banking sector. In recent months, the management of Eurobank headed by Christos Megalou has held a series of meetings with the international investment community, which have resulted in increased interest.

The schedule defined by the Memorandum is very strict, especially bearing in mind that the legislative framework for recapitalization has not yet been developed. If the procedure does not mark any progress, the management of the bank will have to prepare a newsletter after February 12 about the capital increase based on the results of the financial year 2013, and not on the basis of the 9-month period in which the transaction "will fall behind."

Therefore, a law must be voted which needs to include the definition of a selling price in market conditions and a clear concession versus public sector investments, as well as legal protection for members of the Financial Stability Fund.

According to the plan of the Fund for Eurobank, a strategic investor will participate with the amount of 750 million euro in the capital increase amounting to 2 billion euro, while the remaining 1.25 billion euro will be covered by institutional and private investors in Greece and abroad. The aim is to cover the capital increase with private capital, and for the Financial Stability Fund to provide only an uncovered amount, if there is any. According to sources, a minimum of four funds are expected to participate, such as Apollo and Fairfax, which have declared initial interest.