The provision is included in a draft omnibus law (link in Greek) submitted by the Finance Ministry and includes banking system reforms including the implementation of the EU Directive 2013/36/EU regarding the supervision of credit institutions, as well as reforms to the car insurance market.
Particular controversy has been stirred by article 168 which has been described by SYRIZA MP Panagiotis Lafazanis as a provision tailored to Piraeus Bank which ‘facilitates scandals’.
Specifically the article will retroactively relieve Piraeus Bank of hundreds of millions of euros of taxes and liabilities for which it is currently liable following its acquisition of the Greek branches of Cypriot Banks in 2013.
The Greek branches of the Bank of Cyprus and Cyprus Popular Bank were absorbed by Piraeus Bank following a decision by the government in order to safeguard deposits held by both lenders in Greece. The acquisition saw Piraeus Bank add a loan portfolio of 19.5 billion euros, deposits of 12.5 billion euros, 289 branches and over 5,000 employees. Piraeus acquired the branches for the symbolic price of 1 euro, following the recapitalisation of the Greek arms of the two banks to the tune of 1.5 billion euros (950 million of which came from the Hellenic Financial Stability Fund and 550 million from the Cypriot government).
However the acquisition left Piraeus Bank liable for both transfer taxes on the real estate assets it acquired, as well as compensation to the shareholders and bondholders of the Cypriot Banks who sustained major losses from the deal.
Now the government is looking to let Piraeus Bank off the hook both regarding the taxes it owes and regarding its liabilities to third parties, even as the latter are reportedly the subject of ongoing court cases. The draft law is apparently tailor made to cover the Piraeus Bank case; the provision will apply retroactively to transfers made from the beginning of 2013, thus clearly covering Piraeus Bank’s acquisition of the Cypriot bank branches.
It is also not the first time that the Finance Ministry of Yannis Stournaras has attempted such a legal maneuver. The government has tried to include similar provisions twice before in entirely unrelated bills, first in April and then in the December of 2013. However both times the measures failed to pass due to intense opposition.
Opposition party SYRIZA described the latest legal maneuver as a ‘gift’ to the Bank of Piraeus, similar to the government’s foot-dragging in levying an emergency tax on Greek shipowners which, while enshrined in law, has not been implemented. The government has claimed that with regards to the latter there are ‘technical difficulties’ although it is interesting to note that such technical difficulties only seem to arise when those being taxed are powerful players with friends in government.
In an editorial Keratsini Raftopoulou, a member of SYRIZA's financial policy secretariat wrote regarding the latest piece of legislation, “The implementation of the law and the need to increase revenue of the Greek State was forgotten and does not apply for the bankers who are in the pleasant position of enjoying their privileged relationship with those in government and oversight bodies. The need to increase the revenue of the Greek State does not apply for the wealthy who have succeeded through the memorandum laws in receiving state support, in managing public money, in seizing public and private property and, on top of that, being gifted the taxes that they owe, increasing their profits at a time when Greek society is becoming ever more impoverished and the social welfare state is disappearing.”
For his part Christos Gkortsos, the Secretary General of the Hellenic Bank Association was reported to have said, “Article 168 is not a scandal…the purchase of the [banks] by Piraeus Bank took place for reasons of systemic stability and not to benefit any specific bank. the decision was taken to cut off any negative consequence from the Cypriot crisis on Greece.”