With the International Monetary Fund backing down from its demand for an asset quality review (AQR), Bank of Greece Governor Yannis Stournaras is urging banks to accelerate efforts to reorganize their portfolios through the sale of loans, auctions and making viable adjustments.
In an interview published in Sunday’s Kathimerini, Stournaras described the IMF’s initial approach to Greek banks as extreme and claimed that had the Washington-based organization prevailed in its view, it would have needlessly led to a rise in public debt to the tune of 6 percent of GDP and the nationalization of banks.
“The Fund had a erroneous view on this matter and I’m happy it is no longer insisting on that,” Stournaras said. With regard to the European Central Bank’s stress tests for lenders, Stournaras said they could lead to positive results, without, however, categorically ruling out the possibility of recapitalizations.
He also argued that if the country makes a clean break with its bailout programs without having first upgrading its creditworthiness, banks would pay a high price and be forced to rely on the eurozone’s costly emergency liquidity assistance (ELA).
Referring the stalled investment project at Elliniko, Stournaras said there was a lack of common sense, and insisted that Greece has to surprise markets positively by concluding the third bailout review quickly.