Bringing their country to its knees is finally paying off for Greece's bank executives.
The plan developed by the Greek government and its international creditors to recapitalize the country’s banks involves an unusual twist as stock offerings go: the new shares in the banks will give investors free and potentially lucrative warrants that will entitle them to buy many more shares in the future at a predetermined price.
Because many of the investors who are expected to participate in the stock program are the same executives who were running the banks at the time of their near collapse, critics see it as a case of bankers being rewarded despite their management missteps. And they say the Greek government is forgoing billions of euros in potential revenue with the way the stock offering is being handled….
The cash-raising campaign, which began in late May and concludes next month, is meant to pump as much as 23 billion euros into Greece’s three biggest banks. With the lure of the warrants serving as a powerful incentive, Piraeus Bank, National Bank of Greece and Alpha Bank have already succeeded in raising about 2.9 billion euros of this amount, thus ensuring that they will not be nationalized.
The rest of the money will be supplied by European taxpayers, funneled through the Hellenic Financial Stability Fund, the Greek body overseeing the program.