Paulson Fund Backs Embattled Piraeus Bank CEO as Shares Plunge

  • Hedge fund tells Greek officials that Thomopoulos Must Stay
  • Greek bank recap fund denies asking CEO to step down

Paulson & Co. Inc. threw its weight behind Piraeus Bank’s chief executive officer after local media reported that Greece’s bank recapitalization fund was seeking his resignation.

The state-owned Hellenic Financial Stability Fund issued a statement denying that it has asked Anthimos Thomopoulos to step down after the hedge fund, Piraeus’s biggest private-sector shareholder, complained the move would violate the bank’s political independence.

“We made our investment with the understanding that Mr. Anthimos Thomopoulos would remain as CEO, an executive we believe is highly capable of leading Piraeus Bank,” Paulson partner Alex Blades said in a letter to the HFSF seen by Bloomberg. Dated Wednesday, it was copied to the Greek prime minister, the Bank of Greece and the European Central Bank.

Piraeus dropped 7.1 percent to 24.7 euro cents, its lowest since Dec. 14, amid multiple Greek media reports that Thomopoulos might be on his way out. Yet he said in a text message Thursday that he remains CEO and that his relationship with the bank’s chairman, Michalis Sallas, was not an issue.

Political Interference

While the HFSF, which holds 26.4 percent of Piraeus, denied asking Thomopoulos to step down, it noted that Greece’s bailout agreement requires an assessment of the boards of directors of the country’s biggest banks.

“The evaluation will be conducted with the support of an international adviser of recognized experience during the period February-June 2016,” HFSF said in the statement Thursday.

According to Paulson, which contributed to the bank’s last two capital increases, a request for Thomopoulos to resign at the behest of any member of the government would “clearly have been in violation of the laws governing the HFSF and, in particular, safeguarding its independence from political interference.”

The HFSF doesn’t have the authority “either as a shareholder or via its limited board representation” to force Thomopoulos to leave his post, the letter said.

The dispute is the second this week between the anti-austerity government of Alexis Tsipras and international investors, as Europe’s most indebted state struggles to recover from the deepest economic slump since World War II.

On Tuesday, Eldorado Gold Corp. shares tumbled the most in seven years, following a clash between its Greek subsidiary and the government over environmental regulation. The company’s chief executive officer, Paul Wright, told reporters in Athens that its investment in Greece rests on the government’s political will.

Piraeus has raised 1.94 billion euros from private investors since the European Central Bank identified a capital shortfall of 4.93 billion euros last year. The state has provided an additional 2.72 billion euros in keeping with the country’s bailout agreement.

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