Greek Banks May Face Nationalization

Wall Street Journal
October 27, 2011

Greece's banks face the prospect of nationalization and could spend years depending on an insolvent Greek state for life-support after European leaders Thursday decided on a 50% write-down of Greek government debt.

Greek bankers have privately warned that government control will effectively wipe out their shareholders and lead to interference in lending policies—turning back the clock on two successful decades of liberalizing the country's banking sector.

"The way things stand, it looks highly likely—90%-plus likely—that we will need to have public-sector support after the write-down," said one senior Greek banker. "The Greek banks haven't done anything to deserve nationalization, and I fear that this is going to lead to a substantial destruction in shareholder value."

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