Market is gloomy over bank sell-offs

State-controlled National Bank of Greece (NBG) and Commercial Bank yesterday saw their shares slide by 2.37 percent and 2.91 percent respectively after the government said it plans to cut its stakes in both financial institutions as part of a broader deregulation of the financial market. The banks’ fortunes echoed a similar fate suffered by telecoms operator OTE early this month, whose stock lost 3.08 percent of its value on March 7 after Economy and Finance Minister Nikos Christodoulakis confirmed government plans to off load an 8-percent stake in the company. Addressing the Hellenic Bank Association’s annual general meeting yesterday, the minister said the State plans to bring down its shares in NBG and Commercial Bank with the approval of the management at both banks. He did not specify a timeframe for the move nor the method of disposal. Negative investor sentiment aside, analysts were equally unenthusiastic over the government’s announcement. ‘I don’t know how the government can persuade funds with stakes in the banks to sell them. We are not talking about privatizing the banks, as the State does not own the shares. It is merely selling others’ shares. It seems to be a move to create an impression,» said an analyst who asked not to be named. The Post Office Savings Bank holds a 5.55-percent stake in NBG and state portfolio management company DEKA a 4.5-percent share. NBG and its subsidiaries control some 8.6 percent of the bank. The Post Office Savings Bank is the largest single shareholder in Commercial Bank with a 9.3-percent stake, followed by French mutual Credit Agricole with 6.7 percent. State employment agency OAED has a 5.6-percent holding, the Loans and Deposits Fund, 2.7 percent and DEKA, 2 percent. While Credit Agricole has long expressed an interest in increasing its Commercial Bank stake and right of first refusal to DEKA’s and the Loans and Deposits Fund’s holdings, it is not clear how the sale of NBG shares will benefit the country’s largest financial institution. Underlining the government’s determination to remove the stigma of «inertia and immobility,» Christodoulakis said the sale of a 57.8-percent stake in development bank ETBA to privately owned Piraeus Bank would be concluded today with the signing of a contract. Despite reaching agreement last December, the deal has been held up due to complications with the disposal of Hellenic Shipyards, in which ETBA holds a controlling 51-percent stake, and an embezzlement scandal at subsidiary ETBA Finance. The minister said procedures to turn the Agricultural Bank of Greece into a purely financial institution would be sped up with the disposal of non-core banking subsidiaries. In the same vein, the Post Office Savings Bank will soon be converted into a societe anonyme company and floated on the market this year