Posted on 11/28/2015 4:51:14 PM PST by Lorianne
As if Greece didn't have enough economic market woes, last week foreign investment funds managed to take control of four of the country's largest banks — Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank — through $6.42 billion worth of capital increases and a complex set of legal manipulations. As a result, bank shares sold like penny stocks, diluting state ownership in these important institutions that have assets totaling $358 billion.
The country's stake in the National Bank of Greece dropped to 24 percent from 57 percent, and in Eurobank it fell to 2.4 percent from 35 percent, while its stake in Alpha Bank was reduced to 11 percent from 64 percent and in Piraeus Bank it dropped to 22 percent from 67 percent. This translates to a loss of almost $44 billion that Greek taxpayers gave to bail out the banks over the past three years
(Excerpt) Read more at cnbc.com ...
I smell George Soros.
Robbery. I don’t think Greece can recover from this.
George Soros is a tax on stupidity.
Strong presence of Sulphur?
Invest $6 billion, and you will generally want an equity position. Now that the government has a minority position, maybe the banks will quit giving away their money.
One of two things happened. Either members of the Greek Parliament passed these measures to enrich themselves by buying shares of the banks at a greatly reduced rate, or they passed legislation that they didn’t understand in its complexity.
I suspect for most members of parliament, it was the latter. This is a problem in almost every nation where bureaucrats and specialized lawyers write the laws and the actual politicians who pass them are given a simplified summary of what the law is intended to do.
If I had my way, there would be a Constitutional amendment that required a sitting member of the House or Senate to read into the record each bill in its entirety before the bill could be called to a vote.
We need to simplify the law.
Good thing they’re not letting in a bunch of leech, money-sucking refugees! oh wait..
Predators always prey on the weak. Greece did it to themselves with the poison of socialism and free stuff.
The way the world is spunning out of control there is no telling where it all will end. Be prepared.
Too many politicians from every country do not understand economics, currency or monetary policies, or capitalism.
Investors bought shares in these banks.
The banks sold shares to raise capital.
So what was the ripoff?
Investors, those buying the shares, are the ones who set the price for the shares.
It also made it mandatory for the country's regulatory body, the Hellenic Financial Stability Fund, to accept book-building prices, even if they were not properly reflecting share values.
So a law was passed that allowed buyers to set the price, and then required the sellers to sell at that price.
The foreign investors valued the four banks at about $800 million, which is more than three times less than their current market value of $3 billion.
What do you know? The buyers set the value of the banks assets at 27% the market value, crushing the stock prices. Those same buyers then swooped in and bought up controlling shares of the banks. And all perfectly legal because of the laws passed by the Greek Parliament.
That was the ripoff.
They added $6.42 billion in capital to banks that had a market value of $3 billion.
And how the hell is something three times less? It's one third of the value, not three times less the value. Aren't there editors to check these stupid articles before they're published?
Those same buyers then swooped in and bought up controlling shares of the banks.
Yeah, controlling shares of money losing banks with $114 billion in non-performing loans.
That was the ripoff.
The headline said a $400 billion ripoff. If they stole the entire market value of these banks, that would have been $3 billion.
The country's stake in the National Bank of Greece dropped to 24 percent from 57 percent, and in Eurobank it fell to 2.4 percent from 35 percent, while its stake in Alpha Bank was reduced to 11 percent from 64 percent and in Piraeus Bank it dropped to 22 percent from 67 percent. This translates to a loss of almost $44 billion...It's a.k.a. a market economy.
Our creditors are robbing us!
The $400 billion is the approximate amount Greece has been able to borrow from lenders in order to try and salvage its economy. One of the hard assets Greece had was its controlling shares of banks (these four banks have assets of $358 billion according to the article).
The maneuver stripped control of the banks out of the hands of the Greek government, and without having hard assets to use as collateral, it becomes much harder for Greece to get more cash to keep from default.
I’ve said before that there is no good way out of this disaster for Greece, but this move takes away a major crutch for the terminally ill nation.
This bank share purchase doesn't steal this $400 billion from the Greeks.
One of the hard assets Greece had was its controlling shares of banks (these four banks have assets of $358 billion according to the article).
I notice they failed to mention the liabilities of those banks. Probably close to the $358 billion in assets.
The maneuver stripped control of the banks out of the hands of the Greek government,
I'm waiting for the downside.
it becomes much harder for Greece to get more cash to keep from default.
Still waiting.
I've said before that there is no good way out of this disaster for Greece, but this move takes away a major crutch for the terminally ill nation.
Better capitalization of the banks can't hurt.
Your right, Todd. People changing the law to make a quick buck should be praised and not criticized. Who gives a flying f**k about anyone else? As long as those guys made their money, to hell with anyone else.
Capitalism without a fair playing field is just as oppressive and tyrannical as Communism or the basest dictatorship. Making a vast fortune by harming millions of other people is immoral.
If you don’t think so, then we will never agree on the term “ripoff” because you don’t believe that anyone can be ripped off.
The Greece problem was first noted when a clerk in Athens saw a satellite photo of Athens. The clerk noticed that there were many backyard, in-ground swimming pools. The clerk was amazed because a homeowner had to buy a permit to build an in-ground swimming pool.
Nobody had bought a permit.
Now, the Athenians knew they needed a permit, they just ignored the law.
When you start ignoring the little laws, the big criminals come in for the killing.
“You can’t con an honest man.”
But you can con little law breakers.
Now, the big crooks have the people of Greece by the throat and there’s not much they can do because they are all (mostly) little crooks.
They slid down the slippery slope into the mouth of the crocodile.
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