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Troika to meet BoG governor to discuss banks' capital needs

Troika officials are due to meet Bank of Greece Governor Giorgos Provopoulos on Wednesday amid a growing split between Athens and its lenders over how much money will be needed to cover the capital needs of local banks.

Sources at the central bank insisted on Tuesday that Greek lenders would not need more than 6 billion euros. They rejected a Financial Times report published earlier in the week that claimed the International Monetary Fund believes the amount the lenders need might by more than three times as much. It is believed the troika is pushing for the figure to be set at around 8 billion euros.

The Bank of Greece is due to present at the end of this week or early next week the results of stress tests carried out on local lenders by BlackRock. They are expected to confirm the figure put forward by the Greek government.

The issue was a cause of severe friction during Mondays meeting between Finance Minister Yannis Stournaras and troika officials, sources said. Visiting officials held talks on Tuesday with representatives of the Hellenic Financial Stability Fund, which is responsible for overseeing the recapitalization of local lenders.

There was, however, encouragement for Greece and the troika in another area on Tuesday as the two sides agreed that employers' social security contributions should drop in July by 3.9 percentage points in one go, rather than staggered over a period of time. This will be the second such reduction after a 1.4-percentage point cut earlier in the program.

The measure will lead to the government missing out on about 700 million euros per year in revenues. However, Athens believes the measure will help companies boost their earnings and profits, leading to more revenues for the state.

The agreement was reached during a meeting between Interior Minister Yiannis Vroutsis and troika officials. Kathimerini understands that the two sides were also close to an accord on mass dismissals. Such sackings currently need the approval of the labor minister. The troika wants this to change. It appears that Greeces lenders are willing for the final say to lie with the ministrys general secretary.

ekathimerini.com , Tuesday February 25, 2014 (21:05)  
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