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Leave banks private, insists Alpha Bank

02 February 2012 / 22:02:55  GRReporter
2258 reads

Victoria Mindova

Greek bankers, who spoke at the forum on "The Euro and Greece: Dilemmas and Choices" insist that the funding programme for the banking system should improve. The forum was organized by the Centre for Research and Innovation Studies in Athens and presented the opinion of local and foreign specialists on the development of Greece and the fate of the single currency.

The prevailing opinion at the banking panel of the forum on the future of Greece and Europe was that the state should not intervene in the management of private banks, nor should it provide financial assistance, because the results are rarely positive.

"State banks do not operate easily with the rules of market economy and do not always lend according to market principles. Those, who think that the government could manage the banks better than the bankers themselves, I would say, are wrong. If it happens, it would be good for me, because finally I will be able to stay home after years of work," said with slight irony the chief executive of Alpha Bank, Dimitris Matzounis.

The collapse of the local economy has swept the Greek banks, which have  been isolated from the capital markets since the spring of 2010. Following the formal binding of banks with the debt restructuring, the Greek financial institutions have proved to face an even bigger problem with the lack of liquidity.

Besides raising funds in all possible channels of funding, Greek banks do not exclude the possibility of selling some of their most valuable assets along with the consolidation of costs to be able to withstand the pressure. However, bankers are not willing to completely give up their influence in the Balkans, although these assets would be the most easily marketable and provide immediate liquidity to the troubled parent banks. This view was shared by the Governor of the Bank of Greece Nicholas Garganas and by the chief executive of Alpha Bank Dimitris Matzounis. Sale of assets will be inevitable for Greek banks as part of the recapitalization, they say, and emphasize that one of the most successful investments is the expansion of Greek banks in South East European countries.

"Over the years, we have made considerable efforts to expand the influence of the Greek banking system in the Balkans and South East Europe and we have done very well. These are investments that have brought good results," said Matzounis.

The Executive Director of Alpha Bank did not deny that the Greek financial institutions have probably not cut their clothes according to their cloth by the opening of many branches of many different banks, but generally determined the strategic expansion of financial institutions as successful. These already existing infrastructures may be part of the assets for sale that will help Greek banks recapitalize after the recording of actual losses from the debt haircut held by private owners.

According to estimates by the International Monetary Fund from the end of 2011, the six largest banks in Greece, which hold over 90% of the domestic financial market, will need 17 billion euro if the debt haircut is 50%. "The real loss to the banks according to the net present value may be more than 50%, which means that the necessary funds for their recapitalization will be much greater," forecasted the Governor of the Bank of Greece Nicholas Garganas.

Banks, therefore, have to draw up a new real and feasible business plan but they should first seek all opportunities for recapitalization by the private sector. In this connection, the revision of BlackRock helped clarify the necessary actions to restore the stability of the banking sector after establishing the macroeconomic framework in which Greece will develop. Moreover, banks in Greece should not turn their backs on foreign strategic investors, but the new structures of the banks should not lose their Greek nature, emphasized the financier.

The subject of the reduction of the net present value of the Greek foreign debt held by private creditors was addressed by Edmond Alphandéry, a former finance minister of France. He argues, which is not very popular in Europe, that institutional lenders such as the European Central Bank and the International Monetary Fund should involve in the debt cut, not only private investment funds and banks.

"It's not fair that only the private sector should bear the burden of the debt haircut. I think the European Central Bank should also be involved in the process," said Edmond Alphandéry. Alphandéry is clear that Greece will deal with these problems, but believes the country will not get away without serious fiscal restrictions and more stringent supervision on macroeconomic performance. "With or without the existence of the euro, Greece has to carry out structural reforms."

Alphandéry stressed that not only should Greece change but also the eurozone itself should become more flexible and its structure - more unified. "We need greater political integration in the euro area," said Alphandéry.

He stressed the need to ensure the mobility of labour force and capital. "This means that Germany, for example, has to provide jobs for young Spaniards and Greeks, because unemployment there is negligible in contrast to countries in the European periphery." As for the mobility of capital, the French politician and economist said that businessmen and local entrepreneurs from Greece should have equal rights to borrow from French banks, for example.

Tags: EconomyMarketsCompaniesBanksGreeceCrisis
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