Fairfax optimistic about prospects of a Greek debt deal

Thu Apr 23, 2015 5:55pm EDT
 
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By Euan Rocha

TORONTO, April 23 (Reuters) - Fairfax Financial Holdings , which bet on the success of a Greek turnaround last year, said on Thursday it is confident that Greece will reach a deal with its counterparts in the euro zone and remain a part of the currency bloc.

Fairfax last year became a key player in the bailout of one of the country's largest lenders Eurobank, after it bought a 13.6 percent stake in the bank. The Toronto-based firm recently boosted its position in the bank further, even as Greek banks suffered deposit outflows in the face of fears over the Greek government's extended standoff with euro zone partners over reforms.

"We believe a compromise will be reached," said Fairfax CEO Prem Watsa, who is a well known contrarian investor. "We meet with government officials routinely. We believe Greeks want to stay in the Euro group and that within that construct they are trying to do the best deal possible for the people of Greece."

Watsa, who echoed a similar message to the one he gave to Fairfax shareholders at the company's annual meeting last week, said Fairfax raised its stake in Eurobank further last month, as it sought to reduce its average cost base in the lender's stock in the face of the decline in its share price this year.

Last week, Bank of Greece data showed that Greek banks made more use of the so-called emergency liquidity assistance (ELA) in March, boosting their borrowing 4.4 percent from the previous month as outflows of deposits continued.

Earlier on Thursday, Greece's Prime Minister Alexis Tsipras called for a speeding up of work to conclude a reform-for-cash deal with euro zone creditors to keep his country afloat after talks with German Chancellor Angela Merkel that both the sides called constructive.

Fairfax has also bet on two other Greek companies, building positions in real estate investment company Grivalia Properties and Greek industrial group Mytilineos. Both companies have also seen their shares take a hit amid all the uncertainty around a Greek debt deal, but Watsa remains bullish on their prospects too.

"Certainly current events are disruptive to their business, as they are to lives of all Greeks, but we believe they will continue to maintain intrinsic value," said Watsa, whose bet in 2011 on a turnaround in the fortunes of the Bank of Ireland has since paid off handsomely. (Reporting by Euan Rocha; Editing by Bernard Orr)