(Updates with EU approval of Piraeus Bank restructuring in
ATHENS, July 23 National Bank of Greece (NBG)
will proceed with a restructuring which includes
reducing its stake in Turkey's Finansbank, after the
European Commission approved the plan on Wednesday.
NBG was one of Greece's big four banks that were rescued
with state aid during the country's debt crisis. The European
Commission then reviewed NBG's business plan to see if it was in
line with EU state aid rules.
"The measures already implemented and those envisaged in the
future will enable the bank to fully restore its long-term
viability, while limiting the distortions of competition brought
about by the state aid granted," the Commission said on
NBG, majority owned by Greece's bank rescue fund HFSF which
was funded with 50 billion euros from the country's bailout, has
begun to implement salary cuts, branch closures and other
cost-cutting moves, including an early retirement plan.
The restructuring plan also envisages NBG cutting its
holding in its Turkish subsidiary Finansbank to strengthen its
capital position. NBG has almost full control of Finansbank and
will keep a majority stake.
Finansbank has been a steady cash cow for NBG. The Greek
bank's first quarter profits were higher than expected, helped
in part by Finansbank, which contributed 63 million euros or 35
percent of the group's net earnings.
The Commission also said that a relatively limited
downsizing of NBG would be enough to limit any distortions to
competition and did not ask the group to shrink its Greek
It said NBG shareholders and subordinated debt holders had
contributed significantly to reducing the amount of state
capital aid that was injected, having taken part in capital
raising by the bank.
"The injected state aid did not bail out historical
shareholders who have been almost completely diluted," the
The Commission also approved on Wednesday the restructuring
plan of Piraeus Bank, the country's second-biggest
lender by assets after NBG, Piraeus said in a statement.
(Reporting by George Georgiopoulos; Editing by Jane Merriman
and Elaine Hardcastle)