Greece's banks have begun a lobbying behind the country's bailout, in an effort to ease the conditions imposed on their recapitalisation and avoid full nationalisation.
Under the terms of Greece’s €172 billion international bailout – backed by the so-called troika of the European Commission, European Central Bank and the International Monetary Fund – €27 billion is to be injected into the big four lenders, with a further €2.5 billion to be supplied by private sector investors.
The big four banks together hold negative equity of about €8 billion, adding to the disincentive for investors to inject fresh capital. “New investors aren’t willing to pay for yesterday’s losses”, said Nikos Karamouzis, deputy chief executive at Eurobank. “If you want to attract private capital, you have to re-examine the terms.”
No serious fund management companies, and only a handful of hedge funds, have shown any interest in buying equity in Greece’s top banks – National Bank of Greece, which is midway through a merger with Eurobank; Alpha Bank; and Piraeus Bank. Bankers complain that the terms of the recapitalisation, set last summer, valued the banks’ equity at a multiple of between one and two times their book value at a time when most banks across Europe are trading at a fraction of that price. Private sector investors would be given warrants entitling them to buy out the HFSF within five years, though only at the current inflated valuations, which bankers say are likely to far exceed market prices for at least that long.
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