De­pos­i­tors will be shielded from bail-in

Kathimerini English - - Front Page -

Euro-area fi­nancem­i­nis­ters shielded Greek bank de­pos­i­tors from any losses re­sult­ing from the restruc­tur­ing of the na­tion’s fi­nan­cial sys­tem, as part of Fri­day’s deal on an 86-bil­lion-euro bailout. Se­nior bank bond­hold­ers will be in the crosshairs if Greek lenders tap into any of the fi­nan­cial sta­bil­ity funds set aside in the new bailout. Euro-area fi­nance min­is­ters agreed to a deal that will place 10 bil­lion eu­ros in Greece’s bank re­cap­i­tal­iza­tion fund this week, with another 15 bil­lion eu­ros avail­able if needed. A “bail-in of de­pos­i­tors will be ex­plic­itly ex­cluded” from Euro­pean Union rules to make pri­vate in­vestors share the cost of fix­ing trou­bled banks, Eurogroup Pres­i­dent Jeroen Di­js­sel­bloem told re­porters. By shield­ing all de­pos­i­tors, the euro area will pro­tect small and medium-sized en­ter­prises which have more than 100,000 eu­ros in their ac­counts and aren’t cov­ered by gov­ern­ment de­posit in­sur­ance, Di­js­sel­bloem said. This pre­vents “a blow to the Greek econ­omy” that min­is­ters wanted to avoid, he said. In­stead, the fo­cus will turn to bond in­vestors. “When so much money must be in­vested in banks, in the first place, banks must take part of the risks,” Di­js­sel­bloem said. Al­pha Bank’s 400 mil­lion eu­ros of 3.375 per­cent notes due 2017 traded at 70.5 cents on the euro Fri­day to yield 25.4 per­cent. Those se­cu­ri­ties are up from a low this year of 27.5 cents in July. At the start of the new aid pro­gram, the bank funds will be placed in a des­ig­nated ac­count at the Euro­pean Sta­bil­ity Mech­a­nism. Bank su­per­vi­sors can tap the money as re­quired once Greece’s banks have gone through stress tests and an as­set qual­ity re­view. Af­ter Greece’s lenders are re­cap­i­tal­ized, the sub­se­quent bank hold­ings will be trans­ferred to the na­tion’s planned pri­va­ti­za­tion fund, which will then be able to sell off the stakes and use the pro­ceeds to pay back bailout

Ger­man MPs will be re­called from hol­i­day on Wed­nes­day to vote on the pro­posed bailout for Greece, the speaker of Ger­many’s Par­lia­ment, or Bun­destag (pic­tured), Nor­bert Lam­mert, said on Satur­day. An­a­lysts say ap­proval on Wed­nes­day is al­most cer­tain, given that the gov­ern­ing coali­tion has 504 out of 631 seats.

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