Obituary: Constantine Capsaskis
Wednesday 03 November 1993
CONSTANTINE CAPSASKIS, creator of Ergobank SA, the most successful private bank in Greece, revolutionised Greek banking and pioneered its transformation during the 1980s from an antiquated network of political favouritism into a client-orientated computer-based corporate structure. His private life embodied the public-spirited ideal of the 'poor banker': he was a devoted custodian of other people's money with a puritanical sense of mission and fair play.
Born in 1923 on the island of Zakynthos, the son of a shopkeeper, Capsaskis witnessed his father's bankruptcy and subsequent immigration to the United States in search of better fortune. The boy stayed behind with his mother, finished high school and attempted university studies. Financial pressures obliged him, however, to take employment as a clerk with the Commercial Bank, a stronghold of the Andreadis family.
Capsaskis worked in Athens through the years of German occupation and the Greek civil war (1942-49) until he was offered a position at Commercial Bank's London affiliate which he accepted with alacrity, in 1954. In spite of the meagre salary and oppressive atmosphere of a tightly controlled family bank, Capsaskis's sojourn in London proved the turning-point of his career. His experiences in an international financial centre helped him realise that banks can - indeed should - be run as institutions with a corporate structure, a definable financial policy and the objective of service for the public. He saw how British private commercial banks maintained their independence and profits, operating in close interaction with industry and trade, in a sophisticated economy the health of which was registered by the stock market.
Four years later he resigned from the Commercial Bank, took up employment briefly with Hambros and, at the age of 38, joined the American Express International Banking Corporation in New York. Capsaskis stayed with Amex for 15 years, during which he rose from Manager of the Piraeus branch (to which he was appointed after initial training in the US) to Senior Vice-President (the first non-American or Briton to hold the title) with responsibility for the bank's operations in Italy, Greece and Pakistan. This remarkable ascent was primarily due to the phenomenal success of Amex's Piraeus office which Capsaskis established in 1963, introducing American marketing methods and hiring his employees strictly on merit, not patronage as had been the practice in Greece.
The 1960s were times when the Greek shipping community sought to expand its post-war achievements on the international stage. Bankers with independent minds, generous commercial investment policies and an international outlook were able to make inroads into the fastest-growing sector of the Greek economy. Amex's shipping branch became a leading financier of the Greek shipping industry and of Piraeus-based shipowners.
Following the collapse of the military dictatorship in 1974, Capsaskis felt the time was right to set up an independent Greek bank founded on private capital, organised on corporate principles, managed entirely by Greeks and retaining the maximum degree of independence from governmental bureaucracy. The Greek banking system in the mid-Seventies consisted of two huge conglomerates, both under state control, which accounted for more than 80 per cent of banking business: the National Bank and the Commercial Bank (including at the time the Ionian and Credit banks). No new bank had been formed in Greece since 1925.
Capsaskis resigned from Amex and organised a series of private presentations to Greek businessmen, industrialists and shipowners outlining his banking philosophy and prospects for the new institution to be named 'Trapeza Ergasias' (literally, 'Bank of Labour' - operating in the UK and Europe as 'Ergobank'). His proposal met with overwhelming support. The capital required to found the bank was two and a half times oversubscribed. The number of founding shareholders was 1,822 and no shareholder was allowed to hold more than 5 per cent of the initial equity. Greece's first genuine public limited company was born. Ergobank SA commenced operations in November 1975.
Few banks world-wide can match Ergobank's success record since then. Within 18 years its market value has grown from Drs800m to Drs145bn. The total number of shares issued has risen from the original 800,000 to 18,120,000. The bank's assets currently exceed pounds 1,000m. Dividends have increased in excess of 100-fold from Drs100 to Drs12,325 per original share. An investor buying 100 shares for Drs100,000 in 1975 would now have Drs12,800,000. In terms of return on equity and return on assets, recent surveys have consistently ranked Ergobank among Europe's top four banks. The bank's network has expanded to London and subsidiaries will soon be operating in Belgium, Germany and the countries of Eastern Europe.
How can this unprecedented success be explained? Certainly, in a country dominated by mammoth state-sponsored banking concerns, the need for an independent, flexible, commercially minded bank must have teased the minds of many. Capsaskis seized the initiative and made it work. A charismatic manager, he established an open-door policy with his employees, customers and shareholders. Even more important, he developed among all participants of Ergobank relations of mutual trust strong enough to withstand causes of disagreement. In a country where strikes can happen with unnerving regularity, Ergobank's employees have never gone on strike and have always resolved their differences with management amicably.
Capsaskis believed that banking is a calling based on respect and trust. He often remarked that if he had not been a banker he would probably have become a Trappist monk, since both orders willingly take an oath of silence. His commitment to Ergobank was absolute. When asked by a reporter whether he had any hobbies he replied, 'Yes, banking.'
Capsaskis's recent election as Vice-Chairman of the Union of Greek Banks came as confirmation of the esteem in which he was widely held. Aware that his succession might prove a contentious issue, he masterminded a smooth transition of leadership to the two most senior executives of Ergobank. In the bright moments of his final painful illness, he considered this as the last major achievement of his long and successful stewardship.
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