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Greek Bank Head Sent Savings Abroad

Kerin Hope, Financial Times
Monday, 6 Aug 2012 | 2:04 AM ET

A political row has erupted in Athens after the former head of a big Greek state bank admitted to transferring 8 million euros ($9.9 million) of personal savings abroad to buy a London property months before his Agricultural Bank headed towards insolvency.

ATEbank
Kostas Tsironis | Bloomberg | Getty Images
ATEbank

Theodoros Pantalakis, former chief executive of Greece’s Agricultural Bank (ATEbank), strongly denied any wrongdoing, telling Realnews, a Greek website, that he had declared the transaction to authorities in 2011 and had paid tax on the amount transferred.

“I’m on holiday and I don’t plan to say anything more until I come back to Athens,” Mr. Pantalakis told the FT from his villa on the Aegean island of Paros. He is expected to testify on his three years at the helm of ATEbank before a parliamentary committee at the end of August, said a person with knowledge of the dispute.

Dozens of wealthy Greeks, among them politicians, bankers and shipowners, have bought high-end properties in London in the past three years seeking shelter from the country’s deepening crisis, which has left millions of ordinary Greeks squeezed by tough austerity measures.

George Provopoulos, central bank governor, said the Bank of Greece had given details of such transactions to the tax authorities.

“Nobody has suggested Mr. Pantalakis sent the funds abroad illegally ... But there is clearly an ethical issue since he was serving as the head of a big state bank at time of financial and economic crisis,” said a Greek banker who declined to be identified.

Mr. Pantalakis stepped down from ATEbank last month when its healthy assets were acquired for €95m by Piraeus Bank, the country’s fourth-largest lender, in a first move towards consolidating Greece’s struggling bank sector.

He strongly opposed the government’s decision to privatize the bank, arguing that it could be turned around with a 4.6 billion euro capital injection from the Hellenic Financial Stability Fund, a vehicle for recapitalizing Greek lenders using funds from its second 174 billion euro bailout package.

A government official said Greece came under pressure from the European Commission and European Central Bank to split ATEbank into a “good” and a “bad” bank and sell its healthy assets. “The alternative they gave us was to shut it down with the loss of 5,500 jobs,” the official said.

The decision was criticized by Syriza, the radical left main opposition party, as a “great robbery”.Alexis Tsipras, party leader, said he would reverse the privatization if he came to power, adding it had only benefited “bankrupt private bankers”. ATEbank employees staged rolling strikes last week in protest against the takeover.

Mr. Pantalakis will face questions from opposition lawmakers over 150 million euro in loans made by ATEbank to New Democracy and the PanHellenic Socialist Movement, Greece’s two biggest mainstream parties. These loans were insufficiently collateralized and remained unserviced while he ran the bank, analysts said.

ATEbank’s pension fund borrowed 130 million from the bank to finance one-off payments made to retiring employees during Mr. Pantalakis’s watch because of mounting losses, the analysts added.

Mr. Pantalakis is also accused of failing to push ahead with privatization's of companies controlled by ATEbank that had attracted interest from potential foreign buyers, including a leading regional sugar producer and a cigarette manufacturer based in northern Greece.

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