Head of Greek bank rescue fund to face charges over crony loans in Hellenic Postbank scandal – UPDATE

By Nikolas Leontopoulos and Pavlos Zafiropoulos

UPDATE: Ms Sakellariou defies calls for her resignation. Support from Finance Minister and HFSF. See end of story for more detail.

According to prosecutors investigating apparent cases of crony loans being made by the formerly state-owned Hellenic Postbank to companies of well-connected businessmen, the current CEO of the Hellenic Financial Stability Fund (HFSF), Anastasia Sakellariou, is among those for whom there are “sufficient indications for criminal prosecution.”

Ms Sakellariou was a member of the credit committee responsible for overseeing coroprate loans that recommended to the bank's board that two loans to the insurance company Demco (controlled by well-known magnate Mr Contominas) worth a total of 38.5 million euros be refinanced. The refinancing required a new loan worth 42.5 million be issued with repayment over ten years.

It is noted that Mrs Sakellariou, prior to becoming the HFSF CEO, had worked for about a year at the Hellenic Postbank, and in her capacity as Chief Risk Officer on the committee overseeing corporate loans had taken part in the restructuring of debts to the bank.

HFSF was founded in 2010, as part of the country’s commitments to the troika of lenders (the European Central Bank, the International Monetary Fund and the European Commission) and in particular of the recapitalization process of the Greek banking system. The purpose of the Fund is “to maintain the stability of the Greek banking system through the strengthening of the capital adequacy of credit institutions, including subsidiaries of foreign credit institutions, provided they legally operate in Greece under the authorization of the Bank of Greece, and through the recapitalization of transitional credit institutions formed in accordance with article 63E of Law 3601/2007”.

In January 2013, Ms Sakellariou was appointed by the Greek government as CEO of the HFSF. The appointment had been agreed with the troika of lenders.  Ms Sakellariou’s appointment sparked controversy over the height of her salary. According to information posted on the Official Gazette, the head of the HFSF earns 215,000 euros per year.

Later in the same year, the troika ruled that four Greek banks (National Bank of Greece, Piraeus Bank, Alpha Bank and Eurobank) should be qualified as ‘systemic’.  These were bailed-out as part of a broad restructuring of Greece’s banking sector, as directed by the country’s troika of lenders. In total, the recapitalization of the Greek systemic banks cost approx. 30 bn euros raised mainly from taxpayers. 

UPDATE: 

The revelation that Ms Sakellariou faces prosecution has led to immediate calls for her resignation as well as declarations of support both from the HFSF and from the government.

The HFSF has released a statement supportive of Ms Sakellariou, stating that she will remain in her post:

“Ms A. Sakellariou was an executive of the Hellenic post bank and member of the credit committee in 2012. This committee handled the refinancing of two loans to the DEMCO group which had been issued previously and are the subject of criminal proceedings which are underway. The investigation was extended to include the subsequent loan refinancings which were approved by committees of which Ms Sakellariou was a member. The committees proceeded with these refinancings according to standard banking practices.

The investigation of the actions of the committees and its members clearly continues and will ultimately be assessed by the Greek courts.

The Hellenic Financial Structural Fund and Ms Sakellariou continue in their efforts to secure the stability of the financial system.”

Support also came swiftly from Finance Minister Giannis Stournaras. When asked about the criminal investigation faced by Ms Sakellariou following a meeting with the Prime Minister regarding the troika’s return to Athens Mr Stournaras said:

“I have full confidence in and respect of the Justice System, but I also have complete confidence in Ms Sakellariou, in her ethics, her professional credentials and primarily in the work she has done to date.”

Meanwhile Notis Marias, MP with the Independent Greeks as well as PASOK MP Dimitris Karidis called for her removal from her position.

Opposition party Syriza also released a statement calling for the investigation to be widened to examine the role of the HFSF and the Bank of Greece and its chairman, George Provopoulos.

The statement added that Syriza “warns that it will seek in-depth investigations of illegal financing provided by all of the banks, and that their managements be held accountable for their decisions as well as the Bank of Greece and the Hellenic Financial Stability Fund for their negligent audits which seek to cover-up the illegal financing of the specific business circles involved.”