A press release by the European Commission says that the measures already implemented and those envisaged in the future will enable the Bank, which operates branches in Cyprus as well, to return to viability, while limiting the distortions of competition brought about by the state funding.

Commission Vice-President in charge of competition policy Joaquín Almunia said: "Alpha Bank’s restructuring will make a significant contribution to reinforcing the viability of the Greek banking sector, to the benefit of the Greek economy."

According to the press release, Alpha Bank has already started to implement significant restructuring and rationalisation measures. The restructuring plan continues this effort. It provides for a further downsizing of international operations and a reinforcement of Greek operations, mainly through a rationalisation of operating expenses, a reinforcement of the net interest income, the strengthening of the balance sheet and a strict risk monitoring. These commitments will be monitored by a trustee. They will help turn the company into a solid and viable bank that can contribute significantly to the sustainable financing of the Greek economy.

The Commission assessed the plan under its state aid rules for the restructuring of banks during the crisis. In its assessment, the Commission took into account the fact that the difficulties of Alpha Bank did not come from excessive risk-taking but primarily from the sovereign debt crisis and the related exceptionally protracted and deep recession, which started in 2008.

In view of those exceptional circumstances, the aid is less distortive of competition and creates less moral hazard. The Commission therefore concluded that a relatively limited downsizing of Alpha Bank would be sufficient to limit distortions of competition and, in particular, requested no downsizing in the Greek lending activities.

Source: Famagusta Gazette