The deal came ahead of an expected announcement this week that several Athens lenders plan to seek emergency liquidity assistance from the Greek central bank, senior bankers said.
Greek banks no longer have sufficient high-quality collateral to seek funding from the European Central Bank after recent sovereign downgrades. But they are eligible for liquidity allocated by the Bank of Greece in agreement with the Frankfurt-based ECB and are expected to seek it this week.
All four big lenders – National Bank of Greece, Alpha Bank, EFG Eurobank and Piraeus Bank – face a looming liquidity crunch as about €10bn of government deposits are set to be withdrawn from local banks to pay off debt maturing in the next few weeks.
“In this environment, it was essential to prevent Proton from collapsing and creating a mood of fear with unpredictable consequences,” said one banker, explaining the rationale for the take-up of the Proton bond.
Proton, which has just 31 branches, has emerged as the first Greek bank to reach the brink of collapse since the country’s sovereign debt crisis erupted 18 months ago. “It is the small banks like Proton that are most at risk . . . they have been hit by irregular practices as well as the credit crunch,” a Greek financial expert said.
The central bank this month replaced Proton’s board of directors and senior managers, and appointed a special commissioner to oversee operations after discovering a €51m hole in the bank’s balance sheet.
The government also made a €100m emergency transfer to Proton. The bank was however unable to pay back €70m of this amount, after depositors removed funds amid reports that Lavrentis Lavrentiadis, its largest shareholder, was being investigated for alleged embezzlement and money-laundering.
Mr Lavrentiadis, a 39-year-old pharmaceuticals and media magnate known by the media as “Greece’s youngest oligarch”, controls 15 per cent of Proton. More than 30 per cent of the bank’s €850m loan book consisted of loans to struggling businesses controlled by his group, bankers with knowledge of Proton’s balance sheet said.
Mr Lavrentiadis, who moved to the UK last year after setting up a London-based private equity fund alongside a Bulgarian partner, strongly denies any wrongdoing.
The central bank on Friday said it had confidence in Proton’s new board, “consisting of members with long experience of banking” who were expected to move swiftly to find a strategic partner for the bank.
Evangelos Venizelos, the finance minister, has faced criticism from opposition politicians for approving the €100m transfer to Proton in defiance of a law banning the government from depositing funds with banks that face financial problems.
By Kerin Hope taken from http://www.ft.com/cms/s/0/ad8d17a2-cc07-11e0-9176-00144feabdc0.html#axzz1VlSfN6Lv
All four big lenders – National Bank of Greece, Alpha Bank, EFG Eurobank and Piraeus Bank – face a looming liquidity crunch as about €10bn of government deposits are set to be withdrawn from local banks to pay off debt maturing in the next few weeks.
“In this environment, it was essential to prevent Proton from collapsing and creating a mood of fear with unpredictable consequences,” said one banker, explaining the rationale for the take-up of the Proton bond.
Proton, which has just 31 branches, has emerged as the first Greek bank to reach the brink of collapse since the country’s sovereign debt crisis erupted 18 months ago. “It is the small banks like Proton that are most at risk . . . they have been hit by irregular practices as well as the credit crunch,” a Greek financial expert said.
The central bank this month replaced Proton’s board of directors and senior managers, and appointed a special commissioner to oversee operations after discovering a €51m hole in the bank’s balance sheet.
The government also made a €100m emergency transfer to Proton. The bank was however unable to pay back €70m of this amount, after depositors removed funds amid reports that Lavrentis Lavrentiadis, its largest shareholder, was being investigated for alleged embezzlement and money-laundering.
Mr Lavrentiadis, a 39-year-old pharmaceuticals and media magnate known by the media as “Greece’s youngest oligarch”, controls 15 per cent of Proton. More than 30 per cent of the bank’s €850m loan book consisted of loans to struggling businesses controlled by his group, bankers with knowledge of Proton’s balance sheet said.
Mr Lavrentiadis, who moved to the UK last year after setting up a London-based private equity fund alongside a Bulgarian partner, strongly denies any wrongdoing.
The central bank on Friday said it had confidence in Proton’s new board, “consisting of members with long experience of banking” who were expected to move swiftly to find a strategic partner for the bank.
Evangelos Venizelos, the finance minister, has faced criticism from opposition politicians for approving the €100m transfer to Proton in defiance of a law banning the government from depositing funds with banks that face financial problems.
By Kerin Hope taken from http://www.ft.com/cms/s/0/ad8d17a2-cc07-11e0-9176-00144feabdc0.html#axzz1VlSfN6Lv
No comments:
Post a Comment