MARFIN’S operations in Greece are said to be under the spotlight after allegations the bank made a killing by buying government structured bonds and selling them over-price to a pension fund.
Athens dailies reported yesterday that between September 2005 and March 2006, Marfin bought the bonds on the Athens Stock Exchange (ASE) for 149 million euros, later selling them to the hotel employees’ pension fund for 156 million euros.
What was suspect, the papers said, was that in the meantime the value of the bonds dropped around 25 per cent, even before Marfin made the sale, which alone garnered the bank a seven million euro profit on the bond’s nominal value.
Analysts speculated that, if true, the seller of the bonds must have had inside information.
The matter was brought to the attention of Greece’s Labour Minister Vasilis Manginas by five PASOK deputies.
In late April, Greek Prime Minister Costas Karamanlis sacked Labour Minister Savvas Tsitouridis over a 280-million-euro bond affair that has hurt the government’s popularity in an election year.
Press reports and government ministers have said the Greek government structured bond was overpriced when sold to the civil servants’ auxiliary fund.
The affair involved JPMorgan, who subsequently offered to buy back a Greek state bond it underwrote, which ended up with Greek pension funds, amid accusations that the structured bond was overpriced.
The Greek government has appointed a special investigator to probe the case, banned funds from investing in structured bonds and revamped legislation of how they invest their money.
The country’s capital markets commission has revoked the licence of Acropolis Securities, saying the brokerage, which sold the bond to the pension fund, had acted in a way that hurt its client’s interests.
New Labour Minister Vassilis Maginas has vowed to fight corruption and said the government guaranteed people’s pensions.
On May 1, thousands of angry Greeks took to the streets, turning a May Day rally into a protest over the government’s handling of pension fund assets.
An estimated 7,000 demonstrators marched towards the economy ministry in the centre of Athens and public transport workers staged stoppages.
State carrier Olympic Airways joined the walkout, cancelling 42 flights and leaving only one flight per destination. Ferries were tied at ports through the day.
Chanting slogans against the government over the suspected overpriced sale of a bond to a state pension fund, demonstrators demanded the government secured pension funds assets.
In Cyprus, Marfin Popular Bank spokesman Costas Archimandritis told the Mail there was nothing “untoward” in the sale of the structured bonds to the hotel employees fund, adding:
“The employees themselves had agreed on the sale and were keen on it. The bonds have a minimum guaranteed yield of 15 per cent. No one has lost money.”
Hinting there might be a political angle behind the story, he said: “This has been blown out of proportion.”
