The International Finance Corporation (IFC), a unit of the World Bank, plans to invest up to 300 million euros in the recapitalisation of Greece's four big banks via their share issues, an IFC executive said on Friday. Greece's four main banks - National, Piraeus, Eurobank and Alpha - need to fill a 14.4 billion euro capital hole, revealed in a European Central Bank stress test.
All four banks have embarked on a capital raising spree to attract private investors to their share offerings. "We have approval from our board to take part and invest up to 300 million euros in the bank recap," said IFC Vice-President Dimitris Tsitsiragos. "The main goal is to re-establish confidence and trust about investing in Greece."
The IFC, founded in 1956, is a big investor in emerging markets in terms of equity and loans. It has a 40 billion euro investment portfolio worldwide. Its plan to help out in the recapitalisation of Greece's banking sector is similar to plans by the European Bank for Reconstruction and Development (EBRD) which said on Thursday it intends to invest up to 250 million euros in the four banks. The investments will be the EBRD's first in Greece after the bank decided to expand lending to the thrice bailed-out euro zone country early this year.
The IFC is re-engaging in Greece with an eye to support the country's regional role in the Balkans and southeast Europe. It also wants to help provide liquidity to Greek small-size businesses which form the backbone of the economy. "The goal is to restore trust in Greece as an investment destination. The key is not how much money IFC invests but how much it mobilises from third parties. For growth and jobs you need a healthy financial sector," Tsitsiragos said.