Greek Banks: Difficult times for mergers…

Posted by in Economy

Summer scenarios and plans for mergers in the Greek banking sector seems to have fallen in winter sleep, due to the latest economic developments and the possibility of extension of the loan repayment period and the upcoming stress tests in December.

A friend of mine working at one of the biggest banks in Athens explained that what banks need now is rather to be armed against a bad scenario than to throw themselves in adventures. In short, they prefer to collect cash and proceed to capital increase than to spend the “rare” cash money. On Greek bankiers’ mind is the redeem of bonds worth billions of euros from the ECB.

Yesterday European Central Bank said it is ready to lend  € 38,2 billion to banks for three months to help them out with  liquidity. ECB President  Jean Claude Trichet said thought that it’s “not a normal situation” to have banks “addicted” to ECB cash (full story Bloomberg )

Amid  European markets uproar and the PIIGS dominoes falling one after the other it’s more than obvious that Greek banks will not be able to easily free themselves from their ECB-addiction. According to Greek economic media, Greek bankers consider a possible activation of an additional package in December.

Latest report of Credit Suisse  maintains its negative outlook on Greek banks due to negative macro outlook

What’s the latest on Greek Banks?

Piraeus Bank inicitated a sabbatical plan on employees to decrease wages 40-50% for the next three years.

Agricultural Bank-ATE has announced a nine month net loss of 110 million euros, plans a 1 billion euros capital increase and a -10% cut in wages. Closing of branches has not been excluded. State-owened ATE was the only Greek bank to have failed the European stress tests last summer.

CITI Bank Hellas has announced the closure of 31 out of 72 branches. CITI Hellas currently employes 1,400 people. The bank got “poisoned” by the Lehman Brothers products it was selling.