During a summer retreat in 1914, the then governor of the National Bank, Ioannis Euftaxias, invited Prime Minister Venizelos to dinner with particular warmth: “Dear Mr. President, I accept the honor … as next Monday … come to Kifisyan. around 20:00 for lunch… After respect and devotion”. However, this letter is not typical for a relationship between two men that was at odds, and after a serious split, mainly over the issue of financing the purchase of ironclads, Eutaxias was removed from the management of the bank. Words bankers about the rulers were harsh: “Let them at least have the pleasure of boasting that they satisfy their personal inclination to show impressive power and strength …” (I. Evftakiy, State and National Bank, 1914, p. 62). On the other hand, Venizelos is said to have exclaimed “either he or I” (Kostis, History of the National Bank of Greece, 1914-1990, p. 112) and passed a law that regulated, among other things, the key issues of bank management , as well as the removal of Eutaxias.

Without denying that the time period of that time and the special role of the National Bank, which also retained the publishing privilege, differ significantly from today’s data, the above episode is part of the mosaic of the ever-changing relations of the state with large domestic credit institutions. The most recent development in this dichotomy between the state and the bank is the adoption of Law 4941/2022, which, among other things, reforms the institutional framework for the operation of the Financial Stability Fund. It is a legislative intervention with particular practical and symbolic significance. The foundation was created by law 3864/2010 after the first memorandum (law 3854/2010). Its capital was backed by the Greek State and its original purpose was to maintain the stability of the Greek banking system by improving the capital adequacy of lending institutions. The law, with its various amendments from time to time, provided for the ability of the Fund to monitor and evaluate (for strengthened institutions) the degree of compliance with their restructuring plans, ensuring their autonomy, special rights to shares, the ability to establish evaluation criteria for members of the Board of Directors, etc. In fact, in 2015 (Law 4346/2015) additional criteria were added for members of the Board of Directors. and banking committees. Among other things, ten years of experience in senior positions (in banking, audit, etc.) were required. For non-executive members, a minimum of three years’ experience as a member of the Board of Directors was required. a credit institution or an enterprise in the financial sector or an international financial institution. In addition, it was established that the Board of Directors of a credit institution should have at least three experts as independent non-executive members with sufficient knowledge and international experience (at least 15 years), of which at least three years as members of an international banking group not operating in the Greek market. In fact, these members should not have had any relationship with the lending institutions operating in Greece during the previous decade. In addition, at least one member must have had five years of experience in risk management or problem loans. The above conditions have been criticized as they were thought to have led to the de-Hellenization of boards of directors. banks and depriving their leaders with valuable experience.

The changes introduced by the new law concern, in addition to the internal activities of the Fund, the principles and process of its strategic exit from credit institutions, its rights as a shareholder and corporate governance conditions for credit institutions. Thus, the life of the Fund has been extended until 2025, and its goals include the implementation of the expropriation strategy. The previous restrictions on the voting rights of the Fund, corresponding to its blocks of shares, have been removed. Some of the special shareholder rights that the Fund had have now been abolished (for example, the right to call a general meeting, approve a financial manager, and also veto any decision of the Board of Directors of a credit institution regarding business strategy). The right to veto bonuses is limited to institutions with a high proportion of non-performing loans (more than 10%), while for the same institutions there is a limitation on the remuneration of the president, members of the Board of Directors. etc., in relation to the remuneration of the Governor of the Bank of Greece. The Fund’s ability to assess the corporate governance system and establish criteria for assessing the Board of Directors. is abolished. The same applies to tough conditions for members of the Board of Directors. and committees of banks established in 2015. Performing important government functions (for example, as leader of a political party) for the last four years prior to being appointed to the Board of Directors. or the committee is maintained as an obstacle to appointment. The obligation to declare financial ties with a credit institution prior to appointment also remains.

The state-banking duopoly will continue in time to constitute a complex and at the same time decisive relationship for the country’s economy.

In conclusion, two considerations accompany the reform of the Fund’s institutional structure. First, it would be remiss not to recognize the importance of streamlining the law, which, when it came into force, was included in the 2010 “anti-crisis law” and which rightly has not escaped criticism for its intrusiveness and provisions that go beyond the best international standards. corporate governance practices. This is another step in the restoration of the country’s economy and financial system. Secondly, in any case, the interests of the state and banks will remain inextricably linked. Thus, the state-banking duopoly in time will inevitably form relationships that are complex and at the same time decisive for the country’s economy.

* Mr. Alkis G. Mirkos – Juris Doctor, Partner at KBVL (Deloitte Legal Network), Visiting Fellow at Oxford University (Wolfson College).