BoG head says banks may need more funds

Kathimerini English - - Front Page - BY YIAN­NIS PAPADOYIANNIS

Bank of Greece Gov­er­nor Gior­gos Provopou­los said yes­ter­day that cer­tain banks may need some ad­di­tional cap­i­tal once the stress tests con­ducted by Black­Rock So­lu­tions are pub­lished, as he could not fore­see the re­sult of the ex­er­cise con­cern­ing lenders’ loan port­fo­lios.

Re­spond­ing to ques­tions from Greek MPs, the cen­tral banker un­der­lined that there is no cause for con­cern even if banks do need to fur­ther strengthen their cap­i­tal bases, as the Hel­lenic Fi­nan­cial Sta­bil­ity Fund (HFSF) has a large cap­i­tal re­serve amount­ing to 8.7 bil­lion eu­ros that will cover any ad­di­tional re­quire­ments. Eurobank has al­ready an­nounced it will go ahead with a 2-bil­lion-euro share cap­i­tal in­crease, but it is not yet known whether it will be partly or fully cov­ered by the HFSF.

It re­mains un­clear when the re­sults of the stress tests on the coun­try’s lenders will be pub­lished, as the gov­ern­ment and its cred­i­tors have not yet agreed on the fi­nal terms nec­es­sary for the is­su­ing of the re­sults. Greece’s cred­i­tors are in fa­vor of stricter terms, while the banks are hop­ing for more le­nient rules that will al­low them to re­lease some of their cap­i­tal into the mar­ket.

The Euro­pean Cen­tral Bank wants the funds that are not used for the re­cap­i­tal­iza­tion of the banks from the orig­i­nal 50 bil­lion eu­ros to be re­tained as a safety buf­fer for any fu­ture prob­lems. The gov­ern­ment, on the other hand, would like to uti­lize some of the un­used funds to cover other needs, such as the bridg­ing of the fund­ing gap. Asked yes­ter­day by New Democ­racy par­lia­men­tary spokesman Makis Voridis whether the HFSF sur­plus could be used to that end, Provopou­los de­clined to an­swer.

He re­it­er­ated his view that the Greek econ­omy will start re­cov­er­ing this year, with the un­em­ploy­ment rate set to de­crease, the drop in con­sump­tion to slow down, ex­ter­nal de­mand grow­ing partly thanks to tourism, corpo-

Gior­gos Provopou­los un­der­lined that there is no cause for con­cern even if banks do need to fur­ther strengthen their cap­i­tal bases, as the Hel­lenic Fi­nan­cial Sta­bil­ity Fund (HFSF) has a large cap­i­tal re­serve amount­ing to 8.7 bil­lion eu­ros that will cover any ad­di­tional re­quire­ments. rate in­vest­ment in­creas­ing and pri­va­ti­za­tions ac­cel­er­at­ing. He warned, how­ever, against po­lit­i­cal in­sta­bil­ity that could be gen­er­ated by the Euro­pean and lo­cal elec­tions in May.

Provopou­los also stressed that the cen­tral bank did all it was sup­posed to do on the is­sue of Hel­lenic Postbank, warn­ing twice about its mis­con­duct in the is­sue of loans and alert­ing the in­de­pen­dent au- thor­ity of money laun­der­ing, lead­ing to the launch of the cur­rent ju­di­cial in­quiry. How­ever the cen­tral bank chief cau­tioned against what he called sweep­ing state­ments con­cern­ing the bank­ing sec­tor.

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