ECB can stop lo­cal banks from pay­ing cred­i­tors

Kathimerini English - - Focus -

FRANK­FURT (Reuters) – Euro­pean Cen­tral Bank su­per­vi­sory chief Daniele Nouy said yesterday the ECB had the power to sus­pend a Greek bank’s pay­ments to its cred­i­tors if that in­sti­tu­tion was deemed about to be re­solved or liq­ui­dated. Nouy made her com­ments in a let­ter re­spond­ing to a query by a mem­ber of the Euro­pean Par­lia­ment. Un­der an in­ter­na­tional bailout agreed last sum­mer, Greece is set to re­ceive up to 25 bil­lion eu­ros of public money to re­cap­i­tal­ize its banks, many of which are partly sta­te­owned and have been left with few pri­vate stake­hold­ers to “bail in” by con­vert­ing their claims to eq­uity. Asked whether the ECB can in­tro­duce a mora­to­rium to stop “bailin­able cap­i­tal” from leav­ing Greek banks, Nouy said Greek rules gave the ECB the power to do so, pro­vided that a bank it su­per­vised was about to fail. “The aim of such a mea­sure is gen­er­ally to tem­po­rar­ily sus­pend pay­ments to cred­i­tors by the bank in ques­tion, in an­tic­i­pa­tion of the start of liq­ui­da­tion or res­o­lu­tion pro­ceed­ings,” Nouy, chair of the ECB’s bank su­per­vi­sory board, said in her re­sponse to a mem­ber of the Euro­pean Par­lia­ment. The ECB has di­rectly su­per­vised Greece’s four largest banks – Na­tional, Pi­raeus, Eurobank and Al­pha – since tak­ing over over­sight of the eu­ro­zone’s top lenders roughly a year ago. “As a con­se­quence of the con­tin­u­ous mon­i­tor­ing, the ECB has taken ac­tions aimed at re­strict­ing or pre­vent­ing oper­a­tions which would have led to a fur­ther de­te­ri­o­ra­tion in the liq­uid­ity po­si­tion of those banks,” Nouy said in the let­ter.

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