A team from Goldman Sachs was in Athens on Thursday shepherding representatives of Paulson, the US hedge fund, around meetings with local bankers, economists and analysts.
The client visit, the second to Athens this month arranged by the US investment bank, highlights a deepening involvement with Greece’s socialist government as it desperately tries to shore up the public finances and avoid default– and comes after the Financial Times reported this week that the bank was mooting a controversial debt deal with China.
Goldman has not been given an official mandate by the government, but it is playing a large role in the rescue effort. Last year it took George Papaconstantinou, the finance minister, on his first roadshow to London and Frankfurt, along with Deutsche Bank.
Earlier this week the bank was one of the joint-lead managers on Greece’s sale of an €8bn (£7bn, $11bn) government bond.
In the past, Greek governments made a point of sharing out advisory work among investment banks, mainly for privatisation projects. Morgan Stanley, Credit Suisse, Deutsche Bank and UBS won mandates as well as Goldman and JPMorgan.
That has changed since the new government took over. “Goldman pretty much has taken a leading role on advising Greece at the moment,” said a Greek economic consultant. “Their competitive advantage is that they are smart guys and come up with good ideas. That certainly helps in a crisis like now,” the consultant said.
The FT report was based on information from three separate people with close connections to very senior politicians in the Greek government, and a person with close ties to a Greek shipping company which has longstanding relations with senior Chinese foreign trade officials.
These officials told the FT that, through several meetings between very senior Goldman staff and top Greek politicians, including George Papandreou, the prime minister, Goldman promoted a Greek bond sale to Beijing.
The bank also suggested the sale of equity in National Bank of Greece to Chinese financial institutions, the three people said. According to separate officials in China, the institutions were Bank of China, the country’s third largest commercial lender by assets, and China Investment Corp, China’s sovereign wealth fund.
Goldman Sachs denies both of these aspects.
“Goldman Sachs was not involved in any discussions regarding a sale of equity in NBG,” a Goldman spokesperson said. “The only bond we have been working on for the Greek government is the €8bn issue that was completed this week.”
Mr Papaconstantinou confirmed earlier this week to the FT that he would in the next few weeks go on an investors’ roadshow to Beijing, Shanghai and Hong Kong in order to generate interest in Greek government bonds. It is expected that as with the previous European trip, Goldman would be taking a leading role in organising this roadshow, according to investment circles in Greece.
JPMorgan has been important in the past but is being shunned by the new government over a controversy centred on the sale of a structured bond in 2007 to a Greek pension fund, under the previous conservative government. JPMorgan denied any wrongdoing and repaid the funds. The socialist government last week announced it was reopening an investigation into the scandal.
Goldman’s main source of income in Greece is from the Hellenic republic’s borrowing operation, to which it has access as one of 15 Greek and foreign banks that act as market-makers.
“They’re very active in the bond swaps market, which is extremely lucrative,” said the fund manager. It also regularly advises NBG, the country’s biggest commercial lender.
Together with Credit Suisse, Goldman acted for NBG in the €5bn acquisition of Finansbank, a Turkish private lender in 2006 which was seen as a benchmark deal in south-east Europe.
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