Athens Digest 02.03.2018

‘Clean-exit’ row reaches Cabinet

Mission trip ends as Greece faces prior action test

ECB’s Nouy urges crackdown on “strategic defaulters”

Avramopoulos: Bulgaria, Romania close to Schengen membership

Greece, creditors sketch out plan for Hellenic Petroleum sale

# As pressure on the government mounts to qualify its pledge to deliver a so-called ‘clean exit’ from the third bailout, doubts on the issue have emerged from within Prime Minister Alexis Tsipras’ own Cabinet. Stergios Pitsiorlas, a deputy economy minister, told a parliamentary committee that the government did not want a post-bailout credit line from European lenders, but indicated that the issue remained unresolved. “There is no need to make predictions as to whether we will succeed or not in having a precautionary credit line,” he said. “But that must be our goal: To avoid any kind of dependency from August onwards.”
Greece’s opposition conservatives this week suggested that Athens should consider a credit line, backing the position of Bank of Greece governor Yannis Stournaras. Former Socialist finance minister Evangelos Venizelos yesterday also mocked the government’s pledge to deliver a full return to markets after August. He argued that a credit line would calm markets and keep Greece’s access open to cheaper loans. Moreover, in an interview with Naftemporiki, Moody’s EMEA chief credit officer Colin Ellis told that a precautionary credit line for Greece after the end of the current bailout program does not mean that the latter was unsuccessfully concluded. Ellis’ remarks came a week after Moody’s upgraded Greece’s rating, from Caa2 to B3.

# Mission chiefs from bailout institutions ended talks in Athens yesterday, as Greece still faces an important assessment on whether it has caught up with prior actions. The representatives of the IMF and European creditors wrapped up their four-day visit to start the groundwork for Greece’s final review. They are due to return in two months. The government’s first task after the inspection is to persuade lenders they have done enough to secure the release of the next loan installment worth EUR5.7 billion. According to Greek sources, today the Euroworking group is expected to note progress made towards starting a major coastal urban development project at Hellenikon, south of Athens and will also determine that Greece has done enough to ensure that online property auctions of properties in mortgage default are taking place across the country.

# Daniele Nouy, head of the ECB’s Supervisory Board, is urging Greece to crack down on so-called strategic defaulters in the struggle to ease pressure on banks from the mountain non-performing loans. Speaking at the annual Delphi Economic Forum, Nouy reinforced a message from ECB President Mario Draghi that Greece has to drastically step up the number of online auctions of foreclosed properties. More auctions, she said, would oblige those with the ability to pay to reach settlements with banks. “Once electronic auctions work properly, they should prompt defaulting debtors to talk to their banks,” she said. “And here, I am thinking of ‘strategic defaulters’ in particular, people or corporates that could service their debt but adopt a “wait and see policy’.” She added: “At close to 50 percent, Greece has the highest ratio of non-performing loans in the euro area. And this is a huge problem.”

# Dimitris Avramopoulos, the EU Home Affairs Commissioner, has expressed strong support for accepting Bulgaria and Romania into the passport-free Schengen Area. Speaking at the Delphi Economic Forum, he also argued that the expansion would help shore up stability in the region. “Today, more than ever, the close and stable relationship between the EU and the Western Balkans region is of vital importance,” he said.

# Greece’s creditors have reached broad agreement with Finance Ministry officials over a preferred privatisation plan for Hellenic Petroleum. The model favoured by the institutions involves the partial sale of a 45.47 percent stake in the energy group. The company is currently controlled by Latsis Group’s Paneuropean, with 35 percent held by the Greek state. The proposed model would allow a potential strategic investor to obtain a 51 percent holding, acquiring shares from both the state and Paneuropean to secure management rights. The two stakeholders will reportedly try to reach an agreement on the plan by late March.
The privatisation scenario was considered the only viable option for HELPE to attract investment interest and make a progressive transition from a government-supervised enterprise to a largely privatized one.
The price of a 51 percent sale could range from EUR1.2 to 4.8 billion, according to various estimates, raising doubt over whether a strategic investor would actually be eager to pay such a high sum. Nevertheless, the development could pull the plug on alternative privatisation plans previously put forward by Energy Minister George Stathakis, regarding the transfer of state-run energy companies’ equities to the state privatization agency (TAIPED), or the issuance of convertible bonds of equal value. The HELPE sale is a condition for Greece to successfully conclude the third review of its bailout programme, along with the privatisations of a 65 percent stake of gas utility DEPA, a 66 percent of gas grid operator DESFA and 17 percent of the main power utility PPC.

On our Radar: Violent attacks by Papademos bombing suspect’s supporters
Fifteen people have been detained during the protest outside the home of a government official in solidarity with a jailed suspect accused over last year’s bomb attack against former prime minister Lucas Papademos. The protest occurred late last night outside the home of the general secretary of the Justice Ministry, Eftichis Fytrakis. Suspect Constantine Giatzoglou, 29, been hospitalised in the central city of Larissa after refused to take any food or water for the past nine days to protest his prison transfer. The hunger strike has triggered another wave of violent attacks by anarchist groups in Athens.Papademos, a former ECB vice president, was seriously injured last May when he opened a parcel bomb in his car.