Who governs the Greek banks today

An article in Financial Times, on January 13th, 2016, mentioned that the Hellenic Financial Stability Fund (HFSF) had demanded the resignation of the chief executive of Piraeus Bank in Greece, the country's largest commercial lender. The HFSF with a press release denied that there had been such a request. However, on January 15th, 2016, Piraeus Bank Group officially announced the reassignment of the chief executive. That means that an organization such as the HFSF, has the power to manipulate one of the most important banks for the financial sector of Greece.

   According to the HFSF website, the objective of the private organization which was founded in July 2010 -after the first wave of austerity measures in the country- is to contribute to the maintenance of the stability of the Greek banking system, for the sake of public interest. The important clue of that description, is the fact that it acts as a private legal entity, and does not belong to the public sector. Its administrative and financial autonomy, strengthens the view that there are private interests inside the HFSF, hence, finally it is not so independent.

   So, who governs the Greek banks today? The government of Greece, despite the fact that it called itself as a left government, does not want to be involved in the banking section with a straight way, because it will be against the rules of free trade relations. The prime minister of Greece knows very well, that the south Europe does not have the economic resources in order to head the pan-European initiative for a better future, giving an end to the financial and economic crisis.

   In that point of view, the government maintain the existence of the HFSF, because it implies the faith of good cooperation with the creditors. They want a private organization, an independent operator in order to inspect the Greek financial system easier, as the result of a historically unreliable state. For that reason, there is a "Relationship Framework Agreement" between the HFSF and the four systemic banks (Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank). Also, the HFSF has restricted voting rights (private sector participation equal or more than 10%), and representative members in the boards of the banks.

   The question which is stems from the above situation, is about the relations between the creditors (lenders of Greek state) and the organizational structure. Are the general council, the executive committee, or the chief executive officer independent, indeed? Their decision-making process may be vulnerable under the pressure of the non-stabilized economic environment of Greece and the need for financial results.

   For instance, in spring 2013, the Hellenic Financial Stability Fund and the Bank of Greece led the merger of ten Greek banks into the four systemic banks, as they mentioned above. Also, in 2015, there was a remaining buffer of 11 billion euros in European Financial Stability Fund (EFSF) bonds. The Eurogroup insisted that the remaining buffer can only be used for bank recapitalisation and resolution costs, so the question is which bank will take the lead of these capitals, and that is a repeated situation.

   In conclusion, "this is the first time since the fund was set up with cash from Greece's first international bailout in 2010 that it has moved to sack a senior banker.", said Financial Times. In addition, "staffed by senior Greek financial experts appointed by the government with approval from the creditors, the Fund has monitored the banks more closely since the left-wing Syriza government came to power." Hence, Greek banks are governed by a mix of relations between the lenders, the government, the private interests, and the householders, as deposit and investment entities. Finally, one more thing. Yesterday (29/6), the Single Supervisory Mechanism (SSM) rumored that it was the responsible for the cancellation of the appointment of the new CEO at Piraeus Bank.