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Piraeus Bank CEO says central bank audit findings 'firmly behind us'
September 21, 2017 / 9:58 AM / in 3 months

Piraeus Bank CEO says central bank audit findings 'firmly behind us'

ATHENS (Reuters) - Piraeus Bank (BOPr.AT) has rectified internal control deficiencies that emerged in a recent central bank audit, the chief executive of Greece’s largest lender said on Thursday.

People cross a street in front of a closed Piraeus Bank branch in Athens October 26, 2014. REUTERS/Alkis Konstantinidis

“The Bank of Greece inquiry is an issue that has already been dealt with in our financial results in prior periods,” CEO Christos Megalou said in a telephone interview in New York, where he is meeting with investors.

“Aspects including deficiencies in internal controls and the performance of certain members of prior management have been addressed,” Megalou said. “These matters are firmly behind us, enabling us to focus exclusively now on executing our Agenda 2020.”

Megalou, appointed to take the reins of Piraeus in March, declined to comment on the nature of the deficiencies or how and when they were addressed. He also declined to elaborate on the central bank’s confidential audit report.

A source familiar with the report said the audit had uncovered breaches of Greek capital controls, failure to obtain required approvals and irregularities in some staff loans.

The findings have been passed to a supreme court prosecutor, the same source said.

The source familiar with the audit report said its main findings concerned violations of capital controls imposed in June 2015 to halt massive deposit outflows.

The Bank of Greece declined comment on its audit.

Piraeus Bank shares lost more than 20 percent on Wednesday after a newspaper reported that a Bank of Greece audit had found regulatory violations by a number of bankers employed at the lender from 2014 to 2016.

The bank said after Wednesday’s market close that it did not expect any material impact on its capital or financial situation as a result of the audit.

Its shares were up in early Thursday trade, gaining 7 percent to 2.89 euros.

Megalou said the bank was focusing on its business plan, which also included the creation a separate division, Piraeus Legacy Unit, as part of efforts to clean up its balance sheet.

Piraeus, which is 26.2 percent owned by Greece’s bank rescue fund HFSF, aims to sell its Balkan businesses and certain other holdings and shrink its bad loans portfolio as part of its 2020 business plan.

The legacy unit, with risk-weighted assets of 25 billion euros and a non-performing loan ratio of 64 percent, will include international and other banking operations earmarked for sale. It will aim to shrink bad loans via sales and restructuring.

Reporting by George Georgiopoulos; editing by Jason Neely

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