Piraeus Bank Hits Capital Mark

Greece’s Piraeus Bank, whose Chairman, Michalis Sallas, has been accused of questionable activities and is set to make a huge profit out of the country’s coming bank recapitalization –  has raised nearly double the amount of money needed to avoid nationalization, part of a major program to restore health to the country’s financial system.

The bank said it had raised 19.8 percent of its 7.34 billion euros ($9.56 billion) recapitalization needs from private investors. It needed to raise at least 10 percent from private investors to avoid nationalization. The rest of the money will come from the Hellenic Financial Stability Fund, which is financed by the country’s bailout program.

Piraeus becomes the third bank to avoid nationalization, after the National Bank of Greece and Alphabank. Greek banks were left short of money following the restructuring of the government’s debt last year and due to the effects of the deep recession that started in late 2008.

Not mentioned was Sallas’ role in the bank, which the New York Times recently questioned, citing critics who said he pushed the boundaries of proper banking too far and that his maneuvering in the murky world of Greek finance, where the interests of bankers, the media and politicians often commingle, should be more closely scrutinized.

“Piraeus has long used problematic methods that call for investigation,” Costas Lapavitsas, a political economist at the University of London who follows banking and politics in Greece, told the Times.

“What concerns me is that Piraeus has emerged as the leading bank in Greece not because it improved these methods. The old regime is just adapting to the new conditions, and for me that is a sign of sickness and not health.”

Anthimos Thomopoulos, Deputy Chief Executive of the bank, said all aspects of Piraeus’s business “have been exhaustively examined by independent auditors and regulators, inside and outside Greece, with no adverse findings.”