Ten senior Piraeus Bank SA executives left the lender between July and September following suspected irregularities in the sale of a €1.2 billion loan package to New York-based conglomerate Libra Group at a discount, the Financial Times reported.
The loan package, sold to Libra Group in 2014 for €300 million after it borrowed €200 million from the bank to fund the deal, included nonperforming Greek shipping loans with a book value of €1.1 billion, renewable energy loans totaling €80 million, and €30 million of personal loans held by the 10 executives who resigned, "three people with knowledge of the deal" told the FT.
The sources added that some of the loans were transferred to offshore firms in Cyprus and the British Virgin Islands in breach of capital controls introduced in mid-2015, while some of the nonperforming Greek shipping loans, which belonged to struggling Piraeus Bank subsidiary Marfin, were later sold to the original borrowers at a 50% discount, the Oct. 13 report noted.
An Athens anti-corruption prosecutor is reviewing an auditors' report conducted by the Bank of Greece SA on the transaction, according to a judicial official. Potential offenses being investigated include conspiracy to defraud the bank and the Greek state, and money laundering by breaches of capital controls and use of offshore companies, the FT added.
"The recent findings in the Bank of Greece audit, while embarrassing, do not commercially impact the bank," Piraeus Bank CEO Christos Megalou reportedly said. "The past breaches of the regulatory framework are ringfenced, have been provisioned for and have been adequately reflected in the bank's financial statements."
The 10 executives deny any wrongdoing and were given a normal compensation package by the bank upon their departure, "a person with knowledge of the process" told the FT.
Piraeus Bank is 26.01% owned by Greece's bank bailout fund, the Hellenic Financial Stability Fund, according to S&P Global Market Intelligence data.