Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Event Of The Year 2015 In Greece: The Bank Recapitalization!

Posted by hkarner - 10. Januar 2016

Thursday, January 7, 2016, Observing Greece Kastner

For those who have already forgotten about the recent recapitalization of the four large Greek banks, here is a very informative summary. 2015 was full of major and unique events in Greece. To me, the bank recapitalization was arguably the most significant one. Not because it was implemented so flawlessly; not because it was so successful. No! I consider it as the most significant event for the simple reason that what happened there was so absolutely unbelievable. So unbelievable that it may not even have dawned yet on many people what actually happened there.

Think back 5 years to the beginning of the crisis. Imagine that a consortium of top-tier European banks would have made a proposal to acquire a majority of the four large Greek banks as part of an effort to stabilize the Greek banking system. Finally, imagine that those banks would have offered top Euro for the shares of those banks (and in those days, those shares were still quite valuable).

There would have been an outcry of public fury in Greece. Foregoing control over the domestic banking sector in favor of foreign banks? Having future policy decisions being made by foreign investors abroad? Such an outcry would have happened in most other countries where something like that would have happened as well. The banking sector is always a very sensitive sector of the economy and no one really wants to forego domestic control.

And what happened last year under a radical leftist government? Leftist who until then had presented themselves as protectors of national interests; as haters of financial speculators; as haters of profit-seekers? Well, get this: under such a radical leftist government, the majority of the four large Greek banks was sold off to foreign financial investors, to true speculators!

And going forward, whenever the boards of these four banks meet, possibly as often as once a month, a minority of radical leftists will sit around a conference table where the majority is composed of financial speculators. The radical leftists represent only a minority interest in those banks and when the majority takes decisions with which they disagree, they will simply have to accept them.

It is not too long ago that many observers feared that the leftist Greek government would decide to nationalize the Greek banks. Perhaps even expropriate private investors. Instead, they did something which not even the Chicago Boys would have dared to do in Chile 40 years ago — hand over control over the domestic banking sector to foreign speculators and that for a little more than a song!

To pull something like this off in a short time and without the streets overflowing with (not only leftist) protestors is quite a feat! Whether is was a positive or negative feat remains to be seen.

 

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