Fairfax optimistic about prospects of Eurobank and Greece

Mon Feb 2, 2015 2:07pm EST
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TORONTO Feb 2 (Reuters) - Fairfax Financial Holdings , which bet on the success of a Greek turnaround last year, on Monday reiterated confidence in the country's prospects and those of one of its largest lenders Eurobank.

Fairfax last year became a key player in the bailout of Eurobank and currently owns a 13.6 percent stake in the bank. Eurobank, which is 35 percent owned by the Greek bank bailout fund, has been squeezed by an outflow of deposits in recent weeks as political tensions have risen in the country.

Like other Greek banks, Eurobank's stock has been battered since the victory of the left-wing Syriza party of Prime Minister Alexis Tsipras amid fears that a standoff between Athens and its European partners may leave the banks cut off from European Central Bank funding.

Fairfax Chief Executive Prem Watsa, in an interview with Reuters on Monday, said he met personally with the deputy prime minister in Greece's new left-wing government, Yannis Dragasakis and the country's new Minister of Economy Giorgos Stathakis on Friday and had a constructive discussion with them about Greece and Eurobank.

"I'm very confident that this current Greek government will successfully negotiate a deal with the troika," said Watsa, a well known contrarian investor.

The new Greek government has made clear it wants to end the existing arrangement with the European Union, the European Central Bank and International Monetary Fund "troika" when its aid deadline expires on Feb. 28. Instead it wants a bridging deal with the troika to gain breathing space while a new deal is negotiated to reduce Greece's debt burden.

"We feel certain that by moving forward with the reform program and by remaining in the Eurozone, Greece will very soon achieve significant economic growth that will in turn drive new investment," said Watsa, adding that Fairfax would be open to the idea of investing further in Greece once the reform program gets going and the conditions allow for it.

Watsa said he is optimistic about the prospects of Eurobank and that recent management changes at the bank were not forced by the new government.

Eurobank named Nikos Karamouzis as its new chairman and Fokion Karavias its new chief executive on Sunday. It said the changes were prompted by former CEO Christos Megalou's decision to accept a position at Fairfax in Toronto. (Reporting by Euan Rocha; editing by Andrew Hay)