Bank of Greece dis­putes IMF view on cap­i­tal buf­fer

Kathimerini English - - Focus -

Greece’s cen­tral bank is dis­put­ing the In­ter­na­tional Mon­e­tary Fund’s view that the coun­try’s banks need a 10-bil­lion-euro cap­i­tal buf­fer to cover any fur­ther bailout sup­port, say­ing the IMF does not ex­plain why such sup­port would be needed. In an an­nual re­view of Greece’s eco­nomic poli­cies re­leased on Tues­day, the IMF said that the buf­fer is needed be­cause of re­main­ing risks to banks’ as­set qual­ity and a “still bleak” prospect for prof­itabil­ity. “Staff has main­tained its as­sump­tion from May that a buf­fer of around 10 bil­lion eu­ros, 5.5 per­cent of 2016 GDP, should be set aside to cover po­ten­tial ad­di­tional bank sup­port needs,” the IMF said in the re­port re­leased on Tues­day. It said that de­spite suc­ces­sive re­cap­i­tal­iza­tions that pumped about 43 bil­lion eu­ros, equal­ing close to 25 per­cent of GDP, to Greece’s pub­lic debt since 2010, the banks’ bal­ance sheets re­main vul­ner­a­ble to high lev­els of bad loans. An­other IMF con­cern is that half of Greek banks’ cap­i­tal com­prises so-called de­ferred tax as­sets, which it views as con­tin­gent li­a­bil­i­ties of the state. The Bank of Greece dis­putes this, say­ing the IMF is “un­duly pes­simistic” in its macroe­co­nomic and fis­cal pro­jec­tions and that it played down the progress achieved in the bank­ing sec­tor.

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