Bank res­cue fund will have money left over

Kathimerini English - - Front Page -

Greece’s bank res­cue fund will have as much as 7 bil­lion eu­ros left over af­ter coun­try’s four big banks are re­cap­i­tal­ized, the cen­tral bank gover­nor said yes­ter­day. Greece’s four big­gest banks need 27.5 bil­lion eu­ros to plug cap­i­tal holes af­ter losses on govern­ment debt write­downs and bad loans fol­low­ing the fi­nan­cial cri­sis. The money will mostly come from the Hel­lenic Fi­nan­cial Sta­bil­ity Fund (HFSF). With their sol­vency re­stored, the aim is for banks to re­gain ac­cess to cap­i­tal mar­kets and help fund the econ­omy out of its deep six-year slump. The HFSF is funded with 50 bil­lion eu­ros from the coun­try’s Euro­pean Union/IMF bailout to cover the costs of the cap­i­tal in­jec­tions and wind­ing down smaller banks that au­thor­i­ties have deemed non-vi­able. “From the pack­age of 50 bil­lion, we ex­pect there will be a sum left over as a cush­ion that may reach 7 bil­lion, be­tween 6 to 7 bil­lion eu­ros,” Bank of Greece Gover­nor Gior­gos Provopou­los told the Greek par­lia­ment’s eco­nomic af­fairs com­mit­tee. This money could be used if there was any de­te­ri­o­ra­tion in eco­nomic con­di­tions. The cen­tral bank’s out­look is that a re­cov­ery will grad­u­ally emerge next year af­ter six straight years of re­ces­sion. The re­cap­i­tal­iza­tion of Greece’s top four banks – National , Alpha, Pi­raeus and Eurobank – will be com­pleted later in June. Un­der the re­cap­i­tal­iza­tion scheme agreed with Greece’s in­ter­na­tional lenders, at least 10 per­cent of new eq­uity is­sues by the four banks must be bought by the mar­ket for them to stay pri­vately run.

Re­pay­ment guar­an­tee.

The Euro­pean Union may guar­an­tee the re­pay­ment of bank loans made to com­pa­nies in an ef­fort to im­prove firms’ ac­cess to credit, es­pe­cially in south­ern Europe, Euro­pean Com­mis­sion Pres­i­dent Jose Manuel Bar­roso said yes­ter­day. Eas­ier ac­cess to credit is crit­i­cal to get­ting Europe’s econ­omy grow­ing again, with even record-low in­ter­est rates fail­ing to trans­late into an in­crease in lend­ing. The main chal­lenge is to in­ject life into the six shrink­ing south­ern Euro­pean economies – Greece, Cyprus, Italy, Por­tu­gal, Spain and Slove­nia – since they will never be able to pay back their large debts with­out growth.

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