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National Bank of Greece and Eurobank Suspend Talks

April 8, 2013 by Leave a Comment

The move followed reports that the international lenders overseeing a bailout of Greece had feared the creation of a megabank that would be too big to fail. It came amid growing concern in Europe about the threat posed by large banks in small countries in the wake of the banking crisis in Cyprus.

The new bank would have been the biggest in Greece, with assets of around 180 billion euros, or $234 billion. Greece’s gross domestic product stood at around 190 billion euros last year and is expected to contract 4.5 percent in 2013.

The Bank of Greece, the country’s central bank, said late Sunday it had received letters from Eurobank and National Bank of Greece saying they had been unable to ensure that 10 percent of their share offerings would be taken up by the private sector, in accordance with the country’s agreement with its foreign creditors.

Authorities have not ruled out the eventual resumption of talks to complete the merger. The deal was announced in October and talks were already at an advanced stage. A state banking support fund is to decide whether the merger should proceed once the recapitalization of Greece’s four main banks — NBG, Eurobank, Alpha Bank and Piraeus Bank — — is completed, probably by the end of April.

Deposits at all Greek banks are guaranteed, the central bank’s statement added.

NBG took over 84.3 percent of Eurobank in February through a share swap as part of a broader plan to bolster Greece’s banking sector, which has been shaken by bad loans and a private debt write-down last year.

On Sunday, Finance Minister Yannis Stournaras reported “significant progress on many levels” in discussions over Greece’s compliance with the terms of its 130 billion-euro international bailout, and said he expected negotiations could be completed “in the next few days.”

Mr. Stournaras said there would be no further austerity measures such as cuts to pensions and salaries. He said he hoped to conclude talks with the so-called troika of international lenders — the European Central Bank, the European Commission and the International Monetary Fund — before an informal meeting of euro zone finance ministers in Dublin on Friday, when Greek progress in economic reforms is to be examined.

The two sides are also close to agreeing on the number of installments with which Greeks will be permitted to pay off debts to the state, a Finance Ministry official said, referring to some 55 billion euros in outstanding tax and social security payments. The official spoke on customary condition of anonymity.

The troika has yet to respond to Greek requests to soften a contentious property tax, which was introduced in 2011 as an emergency levy.

The mood in the Greek government’s talks with the troika over the weekend appeared to be calmer than it had been at the end of last week, when Mr. Stournaras reportedly challenged officials pushing for more austerity to “take the keys to the ministry and give them to Tsipras.” That was a reference to Alexis Tsipras, who leads the main leftist opposition party, Syriza, which opposes the bailout.

A meeting on Sunday between Prime Minister Antonis Samaras and the foreign envoys, during which he emphasized that austerity-weary Greeks are unable to take more pain, appears to have helped ease the tensions.

Article source: http://www.nytimes.com/2013/04/09/business/global/national-bank-of-greece-and-eurobank-suspend-talks.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Off the Charts: European Banks Thriving as Investor Fears Ease

December 9, 2012 by Leave a Comment

The bank crisis is not yet resolved, but it “appears to have been put on the back burner of investor concerns,” Jeffrey Yale Rubin and Kevin Pleines of Birinyi Associates said in a research bulletin sent to clients this week.

The accompanying charts show what has happened to the share prices of an index of euro zone bank stocks, and to each of the 28 members in the index, since June 30. In early July, the index kept falling, but by late in the month it turned around. Anyone who bought all the banks at the end of June is up by about 25 percent. Anyone with the good fortune to buy at the exact bottom has a profit of about half the money invested.

The bank stocks have outperformed other European stocks and they have outperformed American bank stocks, although the shares of most American banks also have risen.

The reasons for the relaxation of investor fears are simple enough. There is a growing confidence that euro zone institutions will succeed in their support efforts. Finance ministers are still arguing about the details of a single regulator for banks throughout the zone, but the European Central Bank’s promise to lend money to banks that need it is widely accepted, and investors believe that Germany will put up whatever money is needed to keep the euro zone from breaking up.

Troubled governments like Italy and Spain are still paying much more than Germany to borrow, but their rates have fallen. Costs have declined even in Portugal, which is in the weakest position of countries other than Greece. The French banks led the way up in late 2012, but even the price of Banco Espirito, a Portuguese bank, has soared by about half since midyear. There are still major concerns about troubled Spanish banks, and two of those join an Italian institution in being the only stock market losers over the period. But the National Bank of Greece managed a small gain.

None of this means that those banks have served long-term shareholders well. Only one of them, a Finnish institution, has a share price higher than it did at the end of 2007, before the financial crisis.

But, for now at least, investors seem to have growing confidence that the banks will survive. Given the fears of a few months ago, that is reason for celebration.

Floyd Norris comments on finance and the economy at nytimes.com/economix.


Article source: http://www.nytimes.com/2012/12/08/business/european-banks-thriving-as-investor-fears-ease.html?partner=rss&emc=rss

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Markets Rise on Optimism About Greek Vote

June 29, 2011 by Leave a Comment

PARIS — Asset prices were mostly higher in Europe on Wednesday as investors bet that the Greek Parliament would support an austerity plan demanded by international lenders as a condition for providing more funds and preventing a default.

Around midday in Europe, the broad Stoxx Europe 600 Index advanced 1.4 percent and the DAX index in Frankfurt gained 1.5 percent. National Bank of Greece climbed 5.5 percent. Futures on the Standard Poor’s 500 Index expiring in September were slightly higher suggested a modest rise on Wall St at the open. In Tokyo, the Nikkei-225 closed 1.5 percent higher.

Yields on benchmark 10-year Spanish, Portuguese and Greek bonds declined, while safer equivalents issued by Germany and France rose, suggesting investors were switching into riskier securities.

“The rally across markets suggests investors are going into today’s vote expecting a positive outcome,” currency and interest rate analysts at Bank of America Merrill Lynch said in a research note. “This seems justified.”

The main reason for the optimism was that only one member of the governing Greek Socialist Party, Alexandros Athanassiadis, has signaled opposition the package. Another, Thomas Robopoulos, who had previously said he would oppose the measures, declared that he had changed his mind.

Local media, meanwhile, reported that the positions of two or three other party skeptics had softened.

The vote is on approval of a medium-term fiscal strategy for the struggling Greek economy, specifically tax increases, wage cuts and the privatization of more state assets. A second vote is scheduled for Thursday on enabling legislation, for example the timing of the privatizations, especially of the state electric utility.

The votes are critical to unlocking near-term funding, specifically the disbursement of fifth installment of the original €110 billion, or $140 billion, bailout for Athens agreed last year. That instalment would be worth €12 billion and would enable Greece to meet obligations like bond coupon payments in July, while paving the way for a new international lending program to provide financing through 2014. Details of that program would probably be provided by euro area ministers on July 3.

Still, regardless of the votes, some analysts cautioned that the problems for Greece and the euro zone remained far from resolved. Private creditors are still discussing their involvement in a second bailout and many investors think Greece will still have to default.

“Despite the aid package, eventual Greek haircuts may be inevitable, with estimated private sector haircuts of 65 to 77 percent,” Citigroup said in a research report released Tuesday, referring to the writedowns that bond holders will be required to accept.

“In other words, a bailout package addresses the liquidity issue much more than the solvency issue,” Citigroup said.

And two Commerzbank analysts, Benjamin Schröder and Peggy Jäger, said Wednesday that “even if the bills are passed, worries could still linger on for longer, if no broader consensus across Greek political parties forms.”

Article source: http://feeds.nytimes.com/click.phdo?i=e87656d09a002edd4e1dc496c875f276

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