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Independent management to split the Balkan branches from the Greek banks

13 September 2011 / 19:09:44  GRReporter
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The National Bank of Greece is making a separate holding company that will manage its affiliates in the Balkans with the exception of its property in Turkey's Finansbank. The aim is to make the Greek subsidiary banks in the region more independent from the local financial system, which the debt crisis in the country is suffocating.

The National Bank of Greece CEO announced that the independent management of the Balkan branches is necessary to protect the presence of the financial institutions in the region. The objectives of the company also include finding new prospects for business opportunities in the Balkans, while Greece is struggling with its financial woes. Tamvakakis added that this initiative would allow cross-border cooperation between the banks in the region, which would facilitate the access to independent funding.

The headquarters of the new holding company will be based in one of Greece's neighbouring countries not experiencing the macroeconomic turmoil of the Mediterraneans. The newly formed company will initially be 100% owned by the National Bank of Greece, but there will be an option one of the Balkan stock exchanges to join and provide about 30% of the capital of interested investors. This is expected to open new opportunities for alternative interbank funding to supply the local banks. In other words, the goal is to raise fresh funds from the interbank market in New Europe by increasing the levels of liquidity for its own funding, outside the channels of the European Central Bank.

The National Bank has a strong presence in southeastern Europe. It has an operating network of 600 offices with over 8,000 employees and its total assets in Bulgaria, Romania, Serbia, Macedonia and Albania reach € 9 billion. Other financial institutions such as Alpha Eurobank are expected to follow the example of the National Bank of Greece too.

Apparently, the rope around the neck of Greek bankers tightens because the Prime Minister George Papandreou called an emergency meeting with the Minister of Finance Evangelos Venizelos and the government advisor on financial matters Lucas Papadimos. The three politicians will meet the executives of the largest banks in Greece. The subject of their meeting is held in unusual secrecy, but GRReporter sources state that the leaders will want to be informed about the bankers’ plan to reshape the Greek financial market. The President of Alpha Bank Yannis Kostopoulos also visited the President of the Republic Carlos Papoulias, but did not reveal the purpose of their meeting to journalists.

The deepening of the Greek debt crisis is having a serious impact on the Western banking system. The first victim could be the French banks holding a package of devaluated Greek government bonds. The shares of France's BNP Paribas fell 12% in just one day, which according to the Wall Street Journal has seriously affected its ability to raise funds in US dollars. The Bank was quick to deny these claims, stressing that its short-term financing in US dollars reached $ 60 billion and $ 36 billion of them came from US funds.

The shares of Societe Generale also lost their positions and fell 3.2% on Tuesday. Credit Agricole is another financial institution that feels the pressure of international markets and lost 1.2% of the shares value during the previous day. Overall, the French banking system has had serious problems since the beginning of the year and lost about 50% of its financial power, according to the data presented by the Greek media.

Eurobank EFG CEO Nicholas Karamouzos stressed that if Greece eventually leaves the euro zone this would have disastrous consequences for the country but also for the Union. "We should not try to constantly test the patience and tolerance of the international markets and our European partners as it seems that it is wearing thin." He stressed that Greece is currently experiencing the apotheosis of the economic crisis and the lack of liquidity is a serious problem for all structures of the Greek society.

Tags: EconomyCompaniesNational Bank of GreecesplitBalkan branchesGreek banksInterbank funding
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