Greece’s talk of 2014 recovery pulls investors

The billionaire US hedge fund manager John Paulson has fixed his sights on Greece ahead of an expected recovery next year in one of the eurozone’s hardest-hit countries.

The Greek government yesterday said its economy should come out of a six-year-long recession in 2014, having shrunk by 23 per cent since 2008. It forecast 0.6 per cent growth after years of cuts, tax rises and labour-market and pension reforms.

This optimism has not gone unnoticed and Paulson, who made a fortune betting against subprime mortgages, believes there are opportunities in the country’s banking sector.

“We think Piraeus and Alpha, two banks we have a position in, are now very well capitalised and poised to recover,” he says. “They have good management and we think the Greek economy is improving, which should benefit the banking sector.”

Greece has received €240bn (£203bn) in rescue funds from the troika of international lenders – the European Commission, the European Central Bank and the International Monetary Fund.

The state’s bank rescue fund, the Hellenic Financial Stability Fund (HFSF), has pumped €25bn into Greece’s largest four banks – National, Piraeus, Alpha and Eurobank – to shore up their capital positions.

The HFSF, funded with €50bn euros from the country’s bailout, is now the majority owner of all four banks, which are attracting the interest of hedge funds across the world.