Greece shows Britain a maverick state can recover from disorder

by Tony Barber

Financial Times
October 31, 2018

The EU is a bully. The EU is inflexible and unjust. Our proud nation must no longer submit to the diktats of Brussels and its accomplices. These complaints of Brexiters in the UK resemble the indignation of some Greeks about their nation’s treatment during the eurozone’s sovereign debt and financial sector crises.

The British government and people, still unable to settle on a definition of Brexit, can learn from Greece’s long, painful struggle. Some lessons offer grounds for hope. It turns out that a democratic political system and society can emerge, bruised but fundamentally intact, from the most severe of peacetime challenges. Other lessons, showing how an oddball nation on the edge of Europe can rediscover a constructive role for itself, may be less musical to Brexiters’ ears.

Greece’s agony began in the closing months of 2009 when the newly elected government of George Papandreou, the centre-left prime minister, uncovered the terrible truth about the nation’s imploding public finances. In 2010 there began eight years of emergency bailouts, led by the EU and the IMF, and the transformation of Greece into a de facto protectorate of its creditors. The bailout era ended in August, but a surveillance regime is in place that requires strict adherence to fiscal discipline, ­economic reform and administrative overhaul in return for the creditors’ ­support.

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Greek coalition spat undermines hopes of Macedonia deal

by Kerin Hope

Financial Times
October 29. 2018

A stand-off between nationalists and leftwingers in Greece’s fragile coalition government is undermining prospects for settling a three-decade-long dispute over Macedonia’s name, which has blocked the Balkan country’s path towards membership of Nato and the EU.

The leftwing Syriza party of prime minister Alexis Tsipras strongly supports a deal signed with Skopje in June, which removes Athens’ concern that the term Macedonia implies a territorial claim on the Greek region of the same name.

But Syriza’s coalition partner, the rightwing Independent Greeks, has threatened to pull out of government over the Prespa agreement, named after the Balkan lake where it was signed.

Panos Kammenos, the outspoken defence minister and the party’s leader, said last week: “‘North Macedonia’ [the country’s proposed new name] for us is the last straw.”

“We will not accept the term Macedonia, we will walk out of parliament if Syriza presents the agreement [for ratification].”

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A Political History of Modern Greece, 1821-2018

by Aristides N. Hatzis

September 2018

Modern Greece has a history of almost two centuries. During these centuries, the country managed to move from the backwaters of Europe to a prosperous liberal democracy before economic crisis hit the country hard in 2010. Greece was founded after a War of Independence from the Ottoman Empire that was based on liberal and democratic principles. This left a political legacy which led to universal male suffrage as early as 1844 and one of the longest parliamentary histories in Europe, despite the tumultuous political life and brief periods of authoritarian regimes. The 19th century was a period of a slow modernization of the country (in infrastructure and institutions) but is was also suffocated by “Megali Idea”, the irredentist dream of the enlargement of the Greek state to include all lands, under Ottoman rule, inhabited by large Greek-speaking populations. A great part of Megali Idea was realized in early 20th century but the triumphs ended with a devastating catastrophe in 1922. Greek political elites were often incompetent and corrupt, but several reformist statesmen managed gradually to achieve convergence with other western European countries. Most importantly, they were very effective in steering Greece on the right (i.e. winning) side of history during every major European or Global conflict (Balkan Wars, World Wars, Cold War). Greece, after World War II and a ferocious Civil War, enjoyed one of the strongest, almost uninterrupted growth on a global level. This led to the accession to the European Communities in 1981 and later the Eurozone. Today, after ten years of economic crisis and painful austerity, Greece must meet one of the most difficult challenges: to achieve growth by adopting inclusive institutions.

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Kyriakos Mitsotakis Has Big Investment Plans for Greece

by Eleni Chrepa & Sotiris Nikas

Bloomberg
October 17, 2018

Kyriakos Mitsotakis says he’s a man with a mission.

The leader of New Democracy, currently Greece’s main opposition party -- who will become prime minister if his party wins general elections next year -- says what the country needs more than anything else is investment. With that in mind, he says he will issue permits for the mining project in Skouries, northern Greece, in his very first month in office and push for the development of the site of the former Athens Airport of Hellinikon.

The top priority would be to “unblock important and symbolic investment projects” the 50-year-old said in an interview in his spacious, bright office on a busy Athens street. “One way or another, Hellinikon must get off the ground in 2019. This project must not be delayed, not even for a minute longer. Hellinikon is the most emblematic of the big investments in the country. It’s all about the new Athens.”

The projects are together valued at about 11 billion euros ($12.7 billion) and have been stalled for years in legal and bureaucratic red tape in Greece, where luring investments has become critical to reviving an economy that lost about 25 percent of its gross domestic product during its almost decade-long crisis.

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Greek foreign minister resigns over Macedonia disagreement

by Kerin Hope

Financial Times
October 17, 2018

Greece’s foreign minister resigned on Wednesday following a clash with Panos Kammenos, the defence minister, over the country’s recently signed naming agreement with Macedonia.

Nikos Kotzias had earlier accused Mr Kammenos of undermining the leftwing Syriza-led government’s foreign policy at a cabinet meeting on Tuesday, according to Greek media reports.

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Greece Is Trapped

by Ferdinando Giugliano

Bloomberg
October 17, 2018

If you thought Greece’s ordeal was over, think again.

Months after exiting its international rescue program, the country faces renewed trouble in its banking system. There is no easy fix: money is short and investor patience thin. But it looks increasingly like the gradual approach pursued by Athens and the euro zone authorities is running out of steam.

Lenders still bear the scars of a decade of economic crisis. Borrowers are failing to meet payments on almost half of all loans, the highest ratio in the euro zone. A large proportion of banks’ capital is made of so-called “deferred tax assets” – future tax deductions accrued because of past losses – about which investors are skeptical.

True, there are differences in the health of the four largest lenders: Piraeus Bank SA is in the worst shape, while National Bank of Greece SA and Eurobank Ergasias SA are faring much better. But investors have little time for such subtleties: the country’s banking stocks have trailed their European equivalents by 32 percent this year. Even Eurobank trades at an unhealthy 77 percent discount to the book value of its assets.

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What's Wrong With Greek Banks and How It Can Be Fixed

by Nikos Chrysoloras & Sotiris Nikas

Bloomberg
October 4, 2018

Burdened by the highest ratio of bad loans in Europe, Greek banks have no shortage of challenges. And that was before Greece -- the continent’s most indebted state -- decided to end its bailout program in August without requesting a follow-up lifeline backed by European creditors. If doubts about the state of their balance sheets aren’t addressed, concerns about the fate of Greek banks could spiral out of control. That became clear this week when banking shares plunged, though news that the government is weighing plans to help lenders speed up bad-loan disposals arrested the declines.

1. Didn’t the world already fix Greece?

It’s tried. This summer Greece graduated from its third international rescue program and reached a landmark deal with Europe’s other governments that gives it a decade or more to start repaying most of its loans (with the understanding it won’t go back to the spending that brought its economy to the brink of collapse in 2009). The nation’s largest banks have been recapitalized three times since the start of the debt crisis -- most recently in 2015. The state, which has chipped in almost 50 billion euros to shore up capital over the past decade, says its banks are now well-capitalized and poised to gain from a nascent economic rebound. It also says that the banks have now new tools at their disposal to resolve the bad loans issue, including easier out-of-court settlement procedures and e-auctions.

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Sell Off Prompts Greek Banks to Spring Clean Balance Sheets

by Christos Ziotis & Sotiris Nikas

Bloomberg
October 4, 2018

Greek bank stocks reeled amid growing concerns about their need for more capital, even as the biggest lenders were said to set ambitious new targets for reducing their piles of bad debt.

The benchmark FTSE Athex banks index dropped almost 9 percent on Wednesday, after earlier in the day slipping as much as 18 percent. Piraeus Bank SA closed 21 percent lower, having slumped 30 percent to the lowest ever after Chief Executive Officer Christos Megalou told Reuters that the bank is looking for an opportunity to issue debt to boost capital. Bloomberg reported on Friday that the ECB told the lender to increase capital this year.

Piraeus must raise about 500 million euros ($577 million) by selling tier 2 bonds under a plan agreed with the ECB’s Single Supervisory Mechanism, two people with knowledge of the matter told Bloomberg. Traders say the recent deterioration in the European bond market amid political tensions between Italy and the European Union adds to worries about Piraeus’s recapitalization efforts.

The lender is monitoring debt capital markets to identify the right timing for the issuance of the bonds, according to an Athens bourse filing it issued Wednesday in response to press reports. The issuance “remains subject to market conditions,” Piraeus said.

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Greek bank shares slide on bad debt worries

by Martin Arnold & Kerin Hope

Financial Times
October 3, 2018

Some of Greece’s biggest banks suffered steep share price falls on Wednesday as investors worried they may not have enough capital to meet fresh targets on reducing their large portfolios of bad debts.

Shares in Piraeus Bank, the country’s largest lender by assets, dropped more than 20 per cent, cutting its market capitalisation to less than €600m. The bank responded by trying to reassure investors that its plan to boost capital by issuing €500m of subordinated bonds was still on track.

Piraeus was the worst performer in the European Central Bank’s stress tests of Greek lenders in April. After its capital ratio fell lower than rivals in the stressed scenario, it agreed a plan with regulators to raise €1bn of capital by issuing bonds and selling operations in central and eastern Europe.

Fears exist that Piraeus could find it hard to complete its planned bond issue because of general market jitters stemming from concern over the Italian government’s budget deficit plans and the fragility of emerging markets.

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