Clear-out Imminent at Greek Bank Boards

More than a third of the board members at Greece’s four largest banks will be replaced within weeks as part of a governance overhaul of the banking sector. About 20 of the 55 individuals on the boards of the four lenders were likely to fail “fit and proper” tests being conducted by the Hellenic Financial Stability Fund, the rescue vehicle backed by Athens’ international creditors, according to two senior Greek officials. The evaluations are part of a drive to implement rigorous new criteria for how board members are chosen at National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank. The aim is to boost board-level expertise and improve corporate governance by severing the nexus of ties between top bankers, government ministers and powerful business groups — a system known as diaploki, or entanglement. A separate assessment of the governance of the Greek banking sector is being conducted by the European Central Bank under its single supervisory mechanism. The SSM is also close to completing an evaluation of the HFSF’s own board of directors, whose appointments were initially approved by the European Commission and International Monetary Fund — Greece’s main creditors along with the ECB.