Challenges and new opportuni2es arising from the Recent Greek crisis

Transcription

1 Challenges and new opportuni2es arising from the Recent Greek crisis Exposure, protec4on and perspec4ves for foreign corpora4ons and investors

2 The 3 rd MoU A third financial assistance package On August 14, European and Greeks authori4es agreed on a three- year ESM stability support programme for Greece. Greek authori4es, signed a Financial Assistance Facility Agreement with the European Stability Mechanism (ESM) to specify the financial terms of the loan. On August 19, the European Commission signed an MoU with Greece following approval by the ESM Board of Governors for further stability support accompanied by a third economic adjustment programme. Greek Government commi-ed to consult and agree with the European Commission, the European Central Bank and the Interna<onal Monetary Fund on all ac<ons relevant for the achievement of the objec<ves of the Memorandum of Understanding. Condi4ons and framework has thus been set for up to 86 billion in financial assistance to Greece over three years ( ). All above measures have been ra4fied by the Greek Parliament through Law 4336/2015.

3 Agreed Ac2ons Four pillars Restore fiscal sustainability: A target of 3.5% GDP of medium- term primary surplus. Fiscal reforms to strengthen tax compliance and public financial management and fight tax evasion Safeguard financial stability: Addressing Non- Performing Loans (NPLs). The bank recapitaliza4on should be completed before the end of 2015 Growth, compe44veness and investment: Wide range of reforms in labor and product markets. Ambi4ous priva4za4on programme A modern State and public administra4on

4 Perspec2ves A crucial first tranche The first tranche of the financing is expected to give a s4mulus to the Greek economy. Earmarking EUR 10 bn for the financial sector will facilitate the gradual li`ing of capital controls, which are currently suffoca4ng the Greek market The large liabili4es of the Greek state against the private sector are another obstacle for economic ac4vity. In addi4on to EFSM bridge loan (EUR 7 bn) and ECB debt redemp4on (EUR 3 bn), parts of the remaining EUR 16 bn of the first tranche are foreseen for the clearance of such debt exposure

5 Capital controls Developments Ini4ated by Legisla4ve Act of June 2015 and amended following several subsequent acts & ministerial decisions Commercial import & export ac4vity as well as Athens Exchange severely affected Gradual release of ini4al extremely strict restric4ons At the moment obstacles in the financial transac4ons remain: Capital transfers out of Greece are subject to approval by relevant commigee Unlike the Cypriot precedent such restric4ons had a rela4vely limited effect absence of a simultaneous bail- in prompt provision of financial support package bank recapitaliza4on imminent Next step planned : further relaxing of the rules together with the decentraliza4on of decision making

6 Capital controls Market impact Tailor made solu4ons for each case of dealing with restric4ons on financial transac4ons: a variety of issues that require iden4fica4on and handling of par4culari4es Iden4fied horizontal market impact, immobiliza4on of extrovert business ac4vity, deficiency of imports, chain effect on interconnected markets fields Tourist industry was less affected so far, despite inconvenient 4ming Court system was similarly affected: unpredicted legal issues combined with civil procedure challenges Banking system: An opera4ons shi`, from credit and financing structure to a mere payment system Necessity of filling the arising dual market failure related to: financing of corpora4ons/transac4ons and conduct of payments

7 Financial Sector Addressing the weaknesses of the financial sector Greece has commiged to take urgently needed steps to address the exposure of the banking sector to non- performing loans (NPL) The high volume of NPLs and the related over- indebtedness of the private sector divert financing decisions from more efficient/beneficial op4ons Consequently the banks abstain from provision of credit to the economy, thus hindering recovery of growth Dealing with NPLs is being at the core of the recent financial aid package as well as a major component of the banks new financial needs

8 Banking system s new chapter Overview A recapitaliza4on process of banks, to be completed before the end of 2015, will contribute to stabiliza4on of the banking sector The total financial package of the ESM program (EUR 86 bn) includes a buffer of up to EUR 25 bn to address bank recapitalisa4on and poten4al resolu4on costs Bank recapitalisa4on will be accompanied by measures to strengthen the governance of the Hellenic Financial Stability Fund (HFSF) and of banks This way forward will address liquidity deficiencies, lack of stability and will enable the gradual li`ing of capital control restric4ons Currently, conduct of stress tests is being carried out in combina4on with an asset quality review exercise As a result of the stress tests, recapitaliza4on needs of Greek Banks will be set

9 Priva2za2ons Way forward: a new fund Based on the agreement for the recent financial aid package granted to the HR, a new Fund will be established that will hold major state assets (to be defined) and have the purpose of exploi4ng such assets by means of priva4za4on or other alterna4ve methods. The fund will be managed by Greek authori4es but supervised by the relevant European ins4tu4ons. A 4meline of ac4ons is set regarding the establishment of a task force and its work consis4ng of pinpoin4ng opera4onal targets, structure and governance of the fund. The fund will include the shares in Greek banks a`er their recapitalisa4on, thus also enhancing banks' governance. The government has undertaken the commitment to apply relevant measures by March Challenges iden4fied include: Focus on the enhancement of real estate assets value Dealing with the existence of parallel structures such as the HRADF Smooth transi4on from the current regime to the new one An4cipated proceeds from the ac4vity of the fund amount at 50 bn EUR, 25 of which to finance the recapitaliza4on of Greek banks and 12 for investment within the country.

10 European Fund for Strategic Investments (EFSI) Use of funds in Greece EFSI is a product of joint ac4on of EIB and European Commission. Decision was taken to form and submit a list of projects eligible for financing under EFSI in all market sectors by the end of The financing will extend to both private investments as well as PPPs. Op4miza4on of transfusion of funds to the corporate world may be based upon innova4ve financing tools, including VC structures. A new Infrastructure fund to be established following JESSICA model with a capital of around 400 mil EUR, consisted of several sub- funds in the various dis4nct sectors. Timing is of essence, given the capital controls, the recession and the latest refugee inflow.

11 The pending priva2za2ons Within the framework of the prior ac4ons to be taken for the recent financial support package, the Hellenic Republic (HR) has commiged to promote priva4za4on projects The Board of Directors of the Hellenic Republic Asset Development Fund ( HRDAF ) has already approved the Asset Development Plan, which refers to the priva4za4on of all assets under HRDAF as of 31 st December 2014 The Asset Development Plan shall be updated on a six- month basis and be approved by the HRADF and the Cabinet To facilitate the comple4on of the tenders, the Greek government has commiged to complete all pending ac4ons including those needed for the regional airports, TRAINOSE, Egna4a motorway, the ports of Piraeus and Thessaloniki and Hellinikon (land plot of the former Athens airport) The government and HRADF shall announce binding bid dates for Piraeus and Thessaloniki ports of no later than end- October 2015, and for TRAINOSE ROSCO, with no material changes in the terms of the tenders Conclude the sale of the regional airports at the current terms with the winning bidder (FRAPORT) already selected. The implementa4on of the priva4za4on scheme aims at annual revenues (excluding bank shares) amoun4ng to EUR 1.4 billion., EUR 3.7 billion and EUR 1.3 billion for the years 2015, 2016 and 2017,respec4vely

12 Priva2za2ons Working progress Olympic Assets Development of Schinia Rowing Center, Markopoulo Equestrian Centre and Galatsi Olympic Center Financial offers have been submised for Olympic Equestrian Centre & Galatsi Olympic Center Regional Airports 2 clusters of 14 airports in total, including Thessaloniki and the airports of Rhodes, Corfu, Chania, Kos, Zakynthos, Santorini, My2lini, Samos and Mykonos. Remaining 23 regional airports to be priva2zed in the future. The priva2za2on will be effected through concession agreements. FRAPORT AG- SLENTEL Ltd consor2um was declared as the preferred bidder in the Regional Airports tender procedure (of 14 airports) Piraeus & Thessaloniki Port Authori2es (OLP, OLTH) & 10 regional ports Sale of 67% of the shares of the "Piraeus Port Authority", as well as sale of 67% of the shares of the "Thessaloniki Port Authority Submission of binding offers: OLP à October 2015 OLTH à February 2016

13 Priva2za2ons Working progress TRAINOSE & ROSCO (the rolling stock maintenance and availability services company) Sale of 100% of share capital of TRAINOSE S.A. Sale of 100% of share capital of ROSCO Final date for the submission of offers: December 2015 Both tenders are in 2 nd phase / 3 prequalified investors for each Former U.S. Base in Heraklion Exploita2on of two real estate proper2es in Crete. The proper2es consist of (a) a land plot of approximately 30,000 sqm and (b) a beachfront land plot of approximately 316,000 sqm. Kassandra Golf Development of a land plot c. 735,000 sqm in Sani area in Kassandra peninsula. Posidi, Chalkidiki Development of a land plot of a total surface c. 160,000 sqm in Kassandra peninsula. Financial offers have been submised Final Date for the submission of Offers: Pending Final Date for the submission of Offers: Pending

14 Priva2za2ons Working progress Small Ports & Marinas Bou2que Hotels The HR s objec2ve is to establish an extensive network of groups/ clusters of ports and marinas which will be subsequently mone2zed, primarily on the basis of concession agreements, through a series of transac2ons. Xenia Hotels in Vy2na and St. Eleoussa in Rhodes island, Villa de Vecchi in Rhodes island, as well as three Mansions (Xiradaki, Mousli & Evangelinaki) in Pelion Current Status: Currently in second phase of tender process Second Phase underway

15 Priva2za2ons Working progress Real Estate Proper2es Abroad: Group D Proper2es located in Washington, D.C. (U.S.A.), Pretoria (South Africa), Ljubljana (Slovenia), New York (U.S.A.) & Rome (Italy). Final date for the submission of offers: 26 October 2015

16 Priva2za2ons Upcoming projects Athens Interna2onal Airport Hellenic Petroleum Public Power Corpora2on Athens Water Supply & Sewerage (EYDAP) Thessaloniki Water Supply & Sewerage (EYATH) Sale of HRADF's share par2cipa2on in AIA (30%) Priva2za2on of 35.5% of HELPE, which is listed on the Athens Exchange Sale of 17% of PPC s shares, Sale of ADMIE (the Independent Transmission System Operator) & Spin- off of about 30% of produc2on capacity Sale of 11% of shares (state should retain at least 50% +1) Sale of 23% of shares (state should retain at least 50% +1) During 2016 December 2015 During 2016 During 2016.During 2016

17 Priva2za2ons Upcoming projects Athens Interna2onal Airport Extension of the ADA concession agreement between the HR and AIA company. Imminent