Olympian task

1 September 2010 By George Hay Follow @gfhay

The state has hired advisers to examine options for its bank stakes. Consolidation could create stronger lenders and eventually make the system more robust. But it won’t end worries about the sector’s holdings of Greek government debt, or its dependence on central bank funding.

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The Greek ministry of finance announced on Aug. 26 it had selected Deutsche Bank, HSBC and Lazard Freres to "assess the Greek state's strategic options and to valuate its holdings in the banking sector".

The government currently holds 77 percent of ATEBank and 33 percent of TT Hellenic Postbank, as well as stakes in two smaller institutions. The investment banks will report back at the end of September.

Most Greek banks reported swinging falls in firsthalf earnings. National Bank of Greece, the largest lender, saw net profit fall 79 percent compared to the first half of 2009. EFG's net profits fell 70 percent, Alpha Bank's fell 82 percent and Piraeus's fell 92 percent. However, the results were marginally ahead of expectations due to loan repricing and slightly better loan growth and asset quality.

Greek bank shares have fallen 38 percent on average since the start of 2010, more than European peers.

On 15 July, Piraeus, Greece's fourth largest lender, offered 701 million euros to buy the government's ATE Bank and TT Hellenic Postbank stakes. On September 1, the value of the two stakes was 1.19 billion euros.

Finance minister George Papaconstantinou told Greek lawmakers on July 14 that Greek banks needed urgent steps to consolidate, because the nation needed fewer and stronger lenders. However, senior executives at EFG Eurobank, NBG and Alpha Bank have played down talk of mergers.

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