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Piraeus Bank Chairman Sallas resigns after alleged pressure by Paulson’s Hedge Fund

The board chairman of Greece’s largest lender Piraeus Bank (BOPr.AT) resigned on Wednesday after an extraordinary board meeting. Michael Sallas who led Piraeus to become the country’s largest bank by assets after a series of acquisitions said in a statement that the new financial environment needed new managers to “steer the bank in the new era.”

The bank’s board decided unanimously to name Sallas an honorary chairman for his 25-year contribution.

Acting chairwoman of Piraeus Bank is now professor Charikleia Apalagaki, legal advisor at the bank since 2001.

Sallas’ resignation comes allegedly after pressure by hedge fund Paulson & Co, a US hedge fund run by billionaire John Paulson, the biggest private shareholder owning a 9.3 percent stake in Piraeus Bank.

Just hours prior to Sallas’ resignation Greek media reported of “a conflict between Paulson & Co Hedge Fund and the Piraeus Bank management” following rejection of CEO candidate Papadopoulos. The approval was given by the HFSF but rejected by ECB’s SSM.

Paulson had been pushing for changes in Piraeus Bank management since beginning of 2016, especially after the resignation of the bank’s CEO. The controversy sparked friction also with the ECB’s  Single Supervisory Mechanism (SSM), that has in practice the ultimate supervision of the Greek financial system.

In January, Piraeus’s Chief Executive Officer Anthimos Thomopoulos abruptly resigned. This resignation surprised investors and  allegedly angered Paulson thus raising questions over the Athens government’s role in the country’s banking sector.

According to media, “People close to the situation said Thomopoulos had come under pressure to resign from government officials over the past few days. It is unclear what might have drove the government’s desire for a change at one of the country’s largest financial groups or whether the move was sanctioned by the Prime Minister Alexis Tsipras.”

Press reports back then suggested that the HFSF had asked for the resignation of Thomopoulos, while the Paulson firm sent a letter to HFSF’s chairman, supporting Thomopoulos and urging the fund to deny the reports.

According to media sources, Paulson “may effectively have a bigger stake through other portfolios or shareholder alliances, may control a stake that nears 15 percent.”

Paulson took part in the bank’s recapitalization late last year, pumping in about 240 million euros. Piraeus Bank is 26.2 percent owned by the country’s bank rescue fund HFSF, which also bought shares and contingent convertible bonds (CoCos) as part of the recapitalization.

As part of a widespread recapitalization of the country’s troubled banking sector, Piraeus Bank last year raised more than €1 billion from private investors and received a further €3.3 billion from the Hellenic Financial Stability Fund, the bank rescue fund.

Paulson & Co owns also a 7.32% stake in Alpha Bank.

Sallas’ resignation signals the beginning of profound changes in the management of the Greek banks.

Michalis Sallas is regarded as one of the most powerful tycoons in the Greek economy. He was one of founding members of Andreas Papandreou PASOK.

He became Chairman of Piraeus Bank “after the right-wing government of the conservative New Democracy party decided to privatize it in December 1991. He persuaded a group of powerful businessmen to buy the bank and appoint him its chairman.”

Since that time, Piraeus Bank has expanded aggressively, both in Greece and internationally, absorbed several banks among them also the “good” bank of  Agricultural ATEbank. Today it is Greece’s largest bank.

PS as Honorary Chairman, he will still enjoy discount prices for a cup of espresso at Piraeus Bank 🙂

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  1. Below are a couple of articles where Reuters reported about insider deals by Mr. Sallas. Piraeus sued Reuters but I don’t know where that stands.
    The deals which Mr. Sallas made with Marfin Group (Vgenopoulos) are simply mind-boggling.
    Finally, the previous Bank of Greece governor enabled Piraeus to take a 3,4 BEUR windfall profit when they bought the Greek branches of Cypriot banks.
    This is just a selection of major deals. It may be better not to audit the books of Piraeus too much because there are undoubtedly plenty of skeletons. Possibly a microcosm of how the big boys did (do?) business in Greece.

    • Giaourti Giaourtaki

      This was Troika-pre-condition for the 10 billion “bailout” for Cyprus, stealing savers money and finishing off Laiki-bank, I think it was more than 3.4 bln but they only paid 900 mill for it, it was 4.3 and they made 3.4 bln profit out of this perfect crime orchestrated by the even more perfect crime called “democracy”; no wonder banks change their names sometimes.