Veto by the commissioners on critical bank decisions

Finance minister Giorgos Papakonstantinou’s last minute addition to the bill for the Deposits and Loans Fund empowers the relevant state commissioner to veto the critical decisions of financial institutions.

Specifically, paragraph 3 of Article 19 is as follows: “The representative has the right to veto strategic decisions or decisions that fundamentally alter the legal or financial position of the Bank, the approval of which requires a decision by the shareholder general assembly or a decision to distribute dividends and political benefits to the President, CEO and other Board members and the general managers and their deputies, by decision of the Finance Minister or if he judges that said decision may compromise the interests of depositors or substantially affect the solvency and proper functioning of the Bank”.

For example, if the above regulation were active during the National and Alpha Bank negotiations, then the Commissioner could veto the decision of the Board of the latter, according to which the merger proposal was rejected, and raise the issue in the general shareholder meeting of that bank.

A relevant government official, who was asked by protothema.gr, noted that Commissioners must be utilised more than they currently are. “The provided possibility undoubtedly contributes to better corporate governance of banks and does not necessarily consider mergers or partnerships. There are other important issues, which must be submitted at the shareholder general meetings, where foreign investors are present as well”, he said.