The Best of GRReporter
flag_bg flag_gr flag_gb

HSBC: "Friendly" rescheduling of the Greek debt is being prepared

28 September 2010 / 17:09:31  GRReporter
4581 reads

Rescheduling the payments of the Greek debt is inevitable, but the creditors of the country will initiate it, it will be friendly and will not lead to market shock, on the contrary – it will reassure investors. This is the forecast that Steven Major from HSBC made at a banking forum in Athens. He called the rescheduling "voluntary" because the creditors from the European Union and the International Monetary Fund will kind of award the efforts of Greece to reform. Steven Major also stated that Greece will not fail in the short term, the EU aid will continue after 2012 but the crisis will last at least 5-6 years. He declined to answer whether the HSBC is interested to buy any major Greek bank.

It is not realistic according to the economist that Greece will enter the markets soon. He described the idea of the Greek government to issue retail bonds as a difficult step, not as a solution of the crisis that would not bring much money to the Greek economy. But it would be a test for the markets in any case. HSBC's representative emphasized that the European stress tests have saved the banks many important questions thus enabling many of them to pass the tests.

The investors - macroeconomic and political instability

Aryam Vazquez from Wells Fargo said that Greece shows macroeconomic, structural and political instability. The Wall Street investor said that they are not concerned of the Greek banks so much as they will stabilize. Their main concern is how the government will manage the macroeconomy of the country and how responsible the society will behave. He stressed that recent months have been positive for the image of Greece abroad, there are positive comments from the IMF, the government undertook reforms in the right direction. But he also noted that the uncertainty surrounding Greece will continue until the government takes even deeper and more sweeping reforms.

According to the financier, investors will believe only when they see economic growth. He also said that it is one thing to pass a law in parliament and to apply it in practice is completely different. This is the difficulty. Especially concerning the taxes. The government should make efforts to educate citizens and corporations to fulfill their tax obligations.

Wells Fargo representative assessed that the main problem in Greece is that its economy is in stress. There is no production and economic growth is unlikely to stop to fall in the near future. The country can no longer rely on the population boom of 30-40 years ago. Currently, Greece has an aging economy with many costs for pensions and economic activity, which comes mainly from public sector and exports. It is therefore necessary to lower the prices of goods and make a healthy salary cuts.

Keeping an eye on Greece from Wall Street, Aryam Vazquez admitted that the social protests in the country are declining and the government should take advantage of this to deepen the reforms. Nobody could predict at the moment whether the reforms will continue if the government changed. The expert concluded that nothing else in its latest history has destroyed the capacity of Greece like the crisis. Its system has collapsed, the political culture of citizens should change. It is unacceptable for a European Union member country that settles the payments in Euro to be so corrupted. The government should deal with it.

The scientists - the government is inexcusable to talk about the Titanic and speculators on the market

The Oxford professor Dimitris Tsomakos said that the Greek government made serious mistakes. For the first time a government official compared the economy to the Titanic and a few weeks later we have seen the Greek economy to really collapse as the Titanic. No one can talk with such an ease about speculators in the market, he also said. In his opinion bank mergers will not solve the problems of Greek banks, namely liquidity and capitalization. Mergers are outdated, they are obsolete theory of the 1960s. However he did not deny that Greek banks need recapitalization. They are extremely opened to the Greek bonds and this is their biggest problem.

The professor stressed that recapitalization should be supported, not mergers. Cost reduction should be supported, not withdrawal from foreign markets. The dependence of the Greek banking system that is as great as anywhere in the world should be put to an end, said also the professor. He said the creation of banking giants is not the best defence against the crisis, because otherwise the Soviet Union, which had only one bank, had to be the strongest. Dimitris Tsomakos agreed that the banking system must be reformed and proposed those banks that provide loans to be awarded and benefit from this. He also concluded that the crisis is not just economic and financial, it is a crisis of values of society and we have to finally emerge from it.

The lawyers – not the money, the human material is the problem

According to the lawyer Dimitris Paraskevas, nobody can say whether mergers are good or bad, because each case is specific. JPMorgan is an example of a successful merger. Bank of America and Meryll Lynch is an example of a failed merger as it immediately became the biggest problem of America, is his opinion. He said if it comes to debt reduction, the banks would face serious difficulties, because they are very open to government bonds. He also said that the Greek banking problem won’t be solved if no foreign bank buys a large Greek bank. Neither the state, nor the banks themselves can solve the problem of liquidity. So, others’ money is needed. He said he feels sorry for those who will lose their jobs, but this may be a new opportunity for them and will be very healthy for the banking system.

He stressed that not only money is a problem in Greece. The problem is the human material. Dimitris Paraskevas said that the laws in Greece fail because they are written by politicians who want to send certain political messages through them, not by people on the market who know the problems. He gave as an example the law on capital return, according to which only capital stock can return to Greek banks that was in the name of the payer on the day of the law publishing and the payer has no tax obligations to the country. According to him, this automatically excludes people having serious capital abroad. He said that there are no good economists in the public sector. In England, for example, the former head of HSBC will be the next minister of commerce. The law in Greece says that those who have an off-shore company can not hold a public post. This automatically excludes all those who have accumulated billions of shipping, for example. Why to exclude such capable people from the public sector, asked rhetorically Dimitris Paraskevas.

Tags: HSBCDebt reschedulingEconomic crisisInvestorsMarketsGreek banks
SUPPORT US!
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
Subscription
You can support us only once as well.
blog comments powered by Disqus