Greece's stock exchange suspended trading in shares of state-controlled bank Hellenic Postbank on Thursday following a nearly 30% plunge in its shares after the government said the lender could not survive on its own.
Winding down the deposit-rich Postbank, in which Greece holds a 44% stake, has been a government priority as it tries to revive its stalled privatisations drive and regain credibility with foreign lenders.
The government has already transferred or wound down several lenders that were found beyond salvation, most recently agricultural lender ATEbank.
Finance Minister Yannis Stournaras paved the way for the sale or transfer of Postbank to private investors, telling lawmakers late on Wednesday it was no longer viable.
"The finance minister's comment says it all," said Takis Zamanis, head of trading at Beta Securities. "The bank has negative equity and such an effect on the share is logical."
While no group has expressed an interest in the lender, potential suitors include National Bank and Eurobank , Greece's two biggest banks which each hold a 6.1% stake in Postbank.
There has been a flurry of activity in the country's banking sector, with Piraeus Bank on Wednesday confirming it was in talks to buy Societe Generale's Greek unit Geniki, while a three-way battle is under way for Emporiki, the Greek unit of Credit Agricole.
Postbank has suffered from investing heavily in Greek government bonds, which left it with a huge capital gap despite its hefty deposits. A bond exchange to cut the Greece's debt wiped off most of the value of Greek bonds held by private investors, mainly banks.
The lender reported a 544 million euro ($681.5 million) loss for the first nine months of 2011, the last time it published results.
Outraged by the government's remarks, Postbank's union started 24-hour rolling strikes on Thursday, with dozens of employees protesting outside its Athens headquarters, huddled under a banner reading: "No to the sell-off of Postbank".
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