Prem Watsa still has faith in Greek lender that’s only caused him pain

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London/moscow | Published: November 28, 2018 2:52:54 AM

After losing hundreds of millions of euros betting on a turnaround of Greek banks, Prem Watsa still sees recovery around the corner.

Prem Watsa, Grivalia Properties REIC, Greek banks, Fairfax Financial Holdings Ltd, EurobankDespite the losses, Watsa said he’s thrown his full backing behind the merger and securitisation, which aims to slash Eurobank’s ratio of non-performing exposures to about 15 percent from about 39 percent. (Reuters)

After losing hundreds of millions of euros betting on a turnaround of Greek banks, Prem Watsa still sees recovery around the corner. Eurobank Ergasias’s proposed merger with Grivalia Properties REIC reunites two companies the Canadian investor has built major stakes in over the past five years.  The deal, announced on Monday, will make Watsa’s Fairfax Financial Holdings Ltd the largest shareholder in the new lender with a 33 percent stake.

Watsa, who founded Fairfax Financial in 1985 and remains its chairman and chief executive officer, is backing the deal after saying in December that he’s suffered losses in Greece of more than $600 million since 2014. Since last year, there’s been no let up: Eurobank has slumped 31 percent while Grivalia, in which he holds a 51 percent stake, also posted declines. “We’re long term,” Watsa, 68, said in a telephone interview. “We bought shares when they recapitalised, we’re putting in more money through Grivalia. We think this is a very good bank.”

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Despite the losses, Watsa said he’s thrown his full backing behind the merger and securitisation, which aims to slash Eurobank’s ratio of non-performing exposures to about 15 percent from about 39 percent. Eurobank is seeking its own solution to a mountain of bad debt while Greece races to find a nationwide approach to accelerating soured loan disposals.
After the problem loans are taken out, Watsa said, “you’ll have a very well capitalized bank in a very good position to serve the Greek clients as well as the Greek economy.”

The Hyderabad, India-born investor ploughed money into Grivalia in 2013 after successfully betting on a recovery in the Irish bank sector.  The following year he also participated in Eurobank’s recapitalisation, but saw the value of that investment practically wiped out in 2015 when Greece was on the brink of exiting the euro area.

“What Greece has gone through was a unique situation,” Watsa said. “When a country goes through a 25 percent drop in GDP, it’s very difficult for any bank to do well. It needs to be recapitalised, it needs more money to come in. But that’s history now.”

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