Countdown starts to HFSF disinvestment from Greek banks

The Hellenic Financial Stability Fund (HFSF) will launch the procedures, probably in August, for the selection of a specialist consultant who will undertake the preparation of the fund's disinvestment strategy from Greece's lenders. The passing of the new institutional framework for the operation of HFSF, which includes an extension to the fund's lifetime until the end of 2025, and the appointment of the new Board of Directors paves the way for the utilization of HFSF's holdings in the banks, with the government pushing for the fastest return of banks to private ownership.

HFSF currently controls 40.39% of the shares of National Bank, 27% of Piraeus Bank, 9% of Alpha Bank and 1.4% of Eurobank. In addition, it controls 62.93% of Attica Bank's shares. The total current value of the banking shares that HFSF has in its portfolio amounts to 1.69 billion euros, of which 66% is the value of National Bank's stake.

However, despite the government's desire for the disinvestment to proceed quickly, it seems that this will require a fair bit of time: after the selection of the consultant, they will need sufficient time to study the data and propose strategies, and then HFSF’s management will proceed with the implementation, depending on market conditions. In any case, the disinvestment process should be completed by the end of the fund's lifetime at the latest, i.e. by the end of 2025, with most of the parties involved, the government, the Bank of Greece and banks wanting this to happen as soon as possible, as the participation of an entity linked to the state in the share capital of commercial banks is seen as being a negative.

After all, HFSF had a specific mission from the beginning, the recapitalization of banks and their quick return to private hands. It is no coincidence that in all the capital increases that the banks carried out, they sought to reduce HFSF’s participation. On the other hand, there are some within the HFSF who want the fund to evolve into a special type of investor that will also support the system, just as with Attica Bank. As far as the divestment is concerned, they argue that it should be done gradually and with very careful steps in order to maximize the amount that will be recovered from the share sale. Of course, all this now has a limited effect, as due to successive recapitalizations, HFSF has already lost most of its capital. As reflected in HFSF’s financial data at the end of September 2021, 38 billion euros of its initial funds amounting to 42 billion euros have been lost.