Greece limits short-selling ban to top banks

Greece limits short-selling ban to top banks

Greece limits short-selling ban to top banks

AP photo

Greece’s stock market watchdog said Oct. 1 that it was maintaining a short-selling ban on the shares of top banks, including National Bank of Greece (NBG) which owns Turkey’s Finansbank, ahead of an imminent recapitalization process.

“The measure shall be in force Oct. 1 - Nov. 9,” the capital market commission said in a statement.

“Any additional pressure on the listed stocks of credit institutions could have consequences,” it said.

The ban applies to shares of Alpha Bank, Attica Bank, Eurobank and Piraeus Bank along with NBG. 

Short-selling occurs when investors sell shares they do not own in anticipation of a fall in their price, fuelling market volatility.

The short-selling ban was imposed in June alongside capital controls when fears of Greece being ejected from the eurozone caused a run on bank deposits.

Since then, Greece has agreed to a new 86-billion-euro ($96-billion) bailout with international creditors and in early September, the short-selling ban was lifted for equity derivatives.

In its statement, the commission said “recent political developments” did not justify the continuation of the general ban on short-selling and that it had been “decided to prohibit only the short-selling of shares of the credit institutions.”

Greek banks are to be recapitalized by December, before new EU-wide bank rescue regulations that could affect depositors come into play in 2016.

Close to 25 billion euros have been set aside under the latest aid plan to recapitalize Greece’s ailing banks, although this amount could change depending on the outcome of stress tests currently being carried out by the European Central Bank.

Turkism media reported last week that NBG was preparing to sell its whole stake in Finansbank, a shift from an initial plan to sell 40 percent. 

Daily Milliyet said one French and two Middle Eastern potential buyers were interested in the acquisition. 

However, Finansbank quoted its parent company in a filing to the stock exchange on Sept. 29 as saying that there was no final decision on the future of the bank as NBG was considering alternatives to meet the capital shortfall.