ECB wants re­cap funds paid by Nov 15

Frank­furt asks for is­sue of bank money dis­burse­ment to be un­cou­pled from first bailout pro­gram re­view

Kathimerini English - - Front Page - BY YIAN­NIS PAPADOYIANNIS

The Euro­pean Cen­tral Bank is seek­ing to dis­con­nect the is­sue of the Greek bank re­cap­i­tal­iza­tion from that of the bailout pro­gram re­view by the coun­try’s cred­i­tors, ac­cord­ing to a re­port in a Ger­man mag­a­zine.

Weekly busi­ness news mag­a­zine Wirtschaftswoche re­ported yes­ter­day that Frank­furt wants the 15 bil­lion eu­ros set aside for the cap­i­tal strength­en­ing of the Greek lenders to be dis­bursed faster, to make sure the re­cap is com­pleted by the end of this year.

The re­port stated that ECB Pres­i­dent Mario Draghi put pres­sure on eu­ro­zone fi­nance min­is­ters dur­ing last week’s Eurogroup meet­ing for the re­cap funds to be dis­bursed by Novem­ber 15, and not af­ter the first re­view of the pro­gram.

Bank sources say the ECB is wor­ried that if the re­cap is al­lowed to be­come de­pen­dent on the re­view there will be a se­ri­ous risk that the process will not be com­pleted by the end of 2015. The same sources add that the ECB is in­sist­ing on hav­ing the re­cap com­pleted by year-end so as not to run the risk of a hair­cut on de­posits, which the law will al­low for as of Jan­uary 1, 2016.

The mag­a­zine said that Frank­furt is not in­sist­ing on the ma­jor re­forms set as con­di­tions for the loan of the funds for the banks’ share cap­i­tal in­creases, such as the re­struc­tur­ing of the so­cial se­cu­rity sys­tem. In­stead it ap­pears sat­is­fied with the re­forms to the credit sys­tem, such as the es­tab­lish­ment of a res­cue fund for Greek lenders and changes to the banks’ cor­po­rate gov­er­nance strat­egy. How­ever, the re­port stressed that sev­eral mem­ber-states have re­acted an­grily to that prospect.

Bank of­fi­cials es­ti­mate that if the re­cap money is dis­bursed af­ter the first re­view, it will be very hard to com­plete the process within the year as there won’t be enough time left. It is im­pos­si­ble, they say, for a se­ri­ous ef­fort to be­gin to find in­vestors un­less banks is­sue their financial re­sults and it is cer­tain the sta­bil­ity of the credit sys­tem will re­main se­cure in any case.

They also con­sider the dis­con­nec­tion of the re­cap fund dis­burse­ment is­sue from that of the bailout pro­gram re­view a pos­i­tive step as it would ac­cel­er­ate the pro­ce­dure, adding that if the gov­ern­ment gets locked in long ne­go­ti­a­tions again, cre­at­ing un­cer­tainty and con­cerns, it will be un­likely that in­vestors will want to par­tic­i­pate in the re­cap process even if the terms are fa­vor­able.

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