Lenders wary of bond swap

Kathimerini English - - Focus - YIAN­NIS PAPADOYIANNIS

Greek banks stand to miss out on fu­ture earn­ings of 1.2 bil­lion eu­ros if a plan to re­place Euro­pean Fi­nan­cial Sta­bil­ity Fa­cil­ity (EFSF) bonds with other fixed-rate se­cu­ri­ties – one of the mea­sures un­der ex­am­i­na­tion for the eas­ing of the Greek national debt – is im­ple­mented.

The plan con­cerns bonds with a face value of more than 30 bil­lion eu­ros that are in banks’ port­fo­lios and were given to them in the con­text of the var­i­ous re­cap­i­tal­iza­tions.

The Euro­pean Sta­bil­ity Mech­a­nism (ESM) is con­sid­er­ing swap­ping these bonds with other fixed-rate se­cu­ri­ties as a short­term means of light­en­ing the Greek debt, but this has met with the op­po­si­tion of Greek banks’ man­age­ments, who feel that, again, an easy po­lit­i­cal so­lu­tion is to be forced at the ex­pense of the credit sys­tem.

The EFSF bonds add up to 32 bil­lion eu­ros based on orig­i­nal prices and the Euro­pean Cen­tral Bank has re­peat­edly pre­vented banks from valu­ing them at cur­rent prices, which would present earn­ings for them. When they are al­lowed to value them at cur­rent prices, the banks will grad­u­ally reap prof­its of 1.2 bil­lion eu­ros. Bank of­fi­cials say that this would be a sig­nif­i­cant source of rev­enues dur­ing a very dif­fi­cult pe­riod, just as lenders have to tackle the moun­tain of non­per­form­ing loans to­tal­ing 100 bil­lion eu­ros.

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