Anxiety about deposits in cooperative banks

The long consolidation effort for the three cooperative banks (Achaean, Lamia and Limnos-Lesvos), the license of which was revoked yesterday by the Bank of Greece thus initiating the process of their liquidation, has failed.

Especially as concerns the bank of Lamia, the oldest cooperative bank with 14,000 members/unit holders, the recovery effort with the placing of a guardian lasted more than a decade, while the current prime minister Lucas Papademos was still director of the BoG. In the absence of detailed information from the BoG, shareholders and depositors of the three banks are very anxious about the fate of deposits which reportedly exceed 3 billion euros.

The decision to place the three banks under liquidation was taken due to lack of adequate collateral and their simultaneous inability to join the emergency assistance mechanism that would ensure the protection of their deposits.

As announced by the BoG, in accordance with Article 63d of Law 3601/2007, the prescribed procedure for finding a contractor for the deposits and their transfer to another bank will be carried out immediately, while commercial banks in the specific geographical areas have already expressed their interest in taking over the deposits and safeguarding the depositors.

The process of liquidation will assess and dispose of any assets of each bank to cover, if possible, the shareholders, for whom there is no provision for compensation.

Each cooperative portion of the Cooperative bank of Lamia was sold for 150 euros and each member gained the right to acquire preferential deposit rates or more favorable loan terms.

Although the bank consolidation effort took several years, few things saw the light of publicity about the problems that led to the shutdown. Reports speak of completely obscure lending procedures, without criteria, conditions and securities, to the same members for many years. There is also talk of attempts to conceal irregularities that actually “killed” the banks, risking the savings of their depositors who had trusted them expecting the highest yields compared to other commercial banks, which were advertised until last week.