With Greek banks on the ropes and awaiting an injection of 50 billion euros ($65 billion) in state funds, the country’s second-largest lender, Piraeus Bank, said shareholders have approved a recapitalization plan that is intended to safeguard the bank’s solvency.
The bank said was confident it will raise enough funds through private sources to avoid being nationalized. Under the terms of Greece’s international bailout, the country’s banks must raise 10 percent of their recapitalization needs privately in order to avoid coming under state control. Piraeus said its shareholders agreed with the plan worth a total €7.335 billion euros ($9.56 billion).
The announcement came a day after the bank signed a deal to take over the small Millennium Bank, the Greek unit of Portugal’s BCP, in return for the Portuguese bank buying Piraeus shares. Piraeus Chairman Michalis Sallas hailed the shareholder agreement and expressed optimism over the Greek economy that is still reeling in the wake of unrelenting austerity measures that have pushed the country into a sixth year of recession.
Earlier, Eurobank said it would have to resort to getting emergency state aid because it could not raise the 10 percent benchmark to be eligible for recapitalization, raising prospects it would be nationalized.
Greeks banks were undermined when former finance minister Evangelos Venizelos, now the leader of the PASOK Socialists, imposed 74 percent losses on banks and investors in a bid to write down the country’s debt. That ruined Cyprus’ banks and forced the government there to get a 10 billion euros ($13 billion) bailout and confiscate up to 80 percent of bank accounts over 100,000 euros ($130,000) in return.