GREEK shares plunged 16 per cent yesterday as the Athens stock exchange opened for the first time in five weeks. The rout was led by bank shares. The country’s four biggest lenders – the National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank – registered near-30 per cent losses.
“People want to get out if they can,” economist Konstantinos Venetis of Lombard Street Research told City A.M. Both buyers and sellers are hindered by restrictions put in place by the exchange.
“One reason [for the fall in bank shares] is the capital controls for sure. The other is that we will have a recapitalisation of some sort.”
A recapitalisation of banks would likely involve a bail-in, which would shore up lenders at the expense of shareholders.
Reports that such a move was being planned in Brussels emerged at the weekend. It could also hit bond holders, but Venetis said depositors were unlikely to lose any cash.
The impact of capital controls has also impacted the country’s factories. A survey of manufacturers – Markit’s purchasing managers’ index – plummeted to a score of 30.2 in July, figures revealed yesterday. It is well below the 50 level that signals no change in output.
“Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity,” said economist Phil Smith from Markit.