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Facing Collapse, Greece's Postbank to be Privatized

Hellenic Postbank, a small state-controlled lender, is insolvent, Finance Minister Yiannis Stournaras said, and must be sold or transferred to private investors. It was a big lender to the government, which last year imposed 74 percent losses on investors, wiping out many who had put their savings into Greek bonds, and putting Greece’s banks on the brink of bankruptcy. The government is planning to recapitalize the country’s banks but it has been delayed.
Postbank, along with many other Greek banks, took big losses too on Non-Performing Loans (NPL’s) as Greeks have stopped paying loans and credit cards because of pay cuts, tax hikes and slashed pensions. Some 20 percent of the loans are now uncollectable because most banks had been insisting on being paid in full despite the big pay cuts to their customers.
Greece’s banks have also been hurt by the failure of the country’s political parties to pay back $313.5 million in uncollateralized loans they received, a common practice in which the government gets money from banks it controls. The state directly and indirectly holds a 44 percent stake in the deposit-rich lender and officials have already said that the government has placed the bank on its privatization list.
“It (Hellenic Postbank)  has been judged unviable,” Stournaras told Members of Parliament,  referring to a report by the central Bank of Greece and its bank bailout fund, the Hellenic Financial Stability Fund (HFSF.) The bad news came not long after ATEbank, another state-backed entity that kept lending unpaid loans to political parties, had its assets given to Piraeus Bank to keep from going under.
Greece’s international lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECN) has set aside $62 billion to recapitalize other banks deemed to be salvageable. Others will be sold or transferred or fail. The government plans to unveil the final terms of the viable banks’ recapitalization by the end of September, Stournaras said and has postponed a deadline to report banks’ results to October 31, he added.
Hellenic Postbank had invested heavily in government bonds, which left it with a huge capital gap despite its hefty deposits. The bond swap earlier this year wiped off most of the value of bonds held by private investors, mainly banks. Postbank reported a $682 million loss for the first nine months of 2011, the last time it published results. National Bank and Eurobank, the country’s two biggest lenders, each hold a 6.1 percent stake in Hellenic Postbank.
(Sources: Kathimerini, Reuters)
 

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