By Brian Kesten

Back in 2010, Greece agreed to privatize about $56 billion in state owned assets as a component of the international bailout accord at the time. Five years later, Prime Minister Alexis Tsipras appears to have given the greenlight to Greece’s Hellenic Asset Development Fund (“Taiped”) to continue the privatization program, which so far has only yielded about $600 million in cash proceeds towards Greece’s public debt.

Despite opposition from Mr. Tsipras’s own Syriza party, Greece stands to sell 51% stakes in airports, utilities, and other industries. Yanis Varoufakis, the Greek finance minister who resigned during bailout negotiations, argued “[I]t’s not very clever to sell off the family jewels in the middle of deflationary crisis . . . It is wiser to develop state property and increase its value using smart financial resources to strengthen our economy.”

  

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November 04, 2015

By Derek Hunter

On Wednesday April 8th, Greek Prime Minister, Alexis Tsipras, and Russian President, Vladimir Putin met in Moscow at a time when their interests were uniquely intertwined. Russia, of course, is still subject to broad sanctions for its role in the Ukraine civil war, while Greece faces its bailout extension deadline in June. Greece is facing the prospective of another refinancing with significant austerity measures that are politically unpopular at home. While it is unlikely, as the Financial Times reports, Greece could be courting Russia as an alternative source of financing should an EU bailout prove unpalatable. 

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May 01, 2015

By Evan Abrams 

Working in conjunction with the Financial Stability Board, Hong Kong has set out to update its financial industry laws and regulations. While the new law would give policy makers a variety of options to deal with failing institutions, it would allow the government to bailout a variety of banks, brokerages, and insurers if they believe a failure could trigger a systemic collapse. While the bailout provisions may prove unpopular, many observers feel the law is necessary for Hong Kong to remain a competitive and attractive financial hub. The bailout provision may be particularly hard for Hong Kong residents to swallow, because the majority of the island’s financial institutions are foreign companies. See more here from the South China Morning Post.

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March 06, 2015

By Sam Obenhaus

European Union lawmakers struck an agreement with member states that will establish a single resolution mechanism for winding down banks in the event of their failure.  How to structure this authority has been debated for nearly two years.  European Union lawmakers generally support the creation of a centralized rescue fund while member states, most notably Germany, resist any efforts to pool resources into a pan-European Union bailout fund.  Germans fear they will be left on the hook for bailouts of non-German banks.

The agreement reached on Friday creates a bailout fund that will be capitalized by levies on banks.  While some of the money will be put in “national compartments” and not pooled, these divisions will be slowly phased out as the fund is capitalized over an eight-year period.  This is a major victory, at least in principle, for the European Parliament.

While the agreement is a breakthrough, the rescue fund’s €55 billion size strikes many as inadequate.  Another persistent concern is the mechanism’s complexity, which may make the proscribed wind-down process too slow and unwieldy to implement in the context of a financial crisis.

The Financial Times and Wall Street Journal have more on this story.

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March 26, 2014