Finland wants Greek assets held as security

FINLAND has proposed that Greek state assets be transferred to a Luxembourg-based holding company and held there as security for new loans to Athens, according to an internal document seen by Reuters.

The plan, drafted in June, remains a central plank of current Finnish demands for collateral in return for providing more aid. If it does not get its way, Finland may pull out of the bailout, sparking renewed chaos on financial markets.

Although small at around €1.4 billion, Finland’s planned support for Greece is important because its triple-A credit rating adds weight to the €109bn rescue agreed on July 21, the second bailout package Athens has received.

Demands from Helsinki for collateral have sparked requests from countries including Austria, the Netherlands, Slovenia and Slovakia for similar treatment, and threaten to spoil the eurozone’s attempt to save Athens from default.

In the document, Finnish officials set out how the Greek government and its privatisation agency would authorise the transfer of assets to a holding company based in Luxembourg that would be used as security for states giving assistance.

The privatisation agency would own all the shares in the asset-holding company, although the shares would be held in custody by a third party. Since the holding company would be based in Luxembourg, it would operate under Luxembourg law.

Such a move would likely prove controversial in Greece, where the government has strongly rejected suggestions of offering land or company shares as collateral for future loans. It would in effect mean Greece losing sovereignty.

The Finnish proposal would hand over control of a sizeable portion of Greece’s assets to a foreign agency, limiting Athens’ autonomy in managing its finances and privatising state assets, an area where scant progress has frustrated eurozone partners.

“The Privatisation Agency is managing the AHC (Asset Holding Company) and can use AHC in a flexible way as one vehicle to securitise, manage, develop and privatise assets,” reads the Finnish proposal, dated June 23.

As well as acting as a warehouse for Greek property, such a stake in a national phone company or port, the Luxembourg vehicle would ringfence assets so they are not used for other borrowing but instead kept as security for countries offering aid.

The Finnish plan also flags a possible securitisation of the assets held in Luxembourg, using cash flow generated from an airport, for example, as security for loans.