Wednesday September 17, 2014 Search
Weather | Athens
27o C
20o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Greece’s blueprint to plug funding gap

 Athens will try to persuade creditors on use of excess bank recap funds and on a limited bond issue

By Vassilis Ziras

While Greek bond interest rates have dropped below 8 percent, the tug of war between Athens and its creditors is raging over the country’s return to the markets and the use of the excess funds set aside for the bank recapitalization, as the government is trying to avoid a third bailout agreement.

The absence of an agreement on the unused bank recap funds has resulted in the postponement of the announcement of the bank stress test results. That was originally scheduled for end-December, but has now been put off by a month until a deal is reached.

The government expects to cover some of the funding gap for 2014-15 with the money that banks will not need for their recap. This is why it it seeking the best possible terms for the stress tests, including a lowering of the capital adequacy threshold (Core Tier I index) from 9 percent to 8 percent in line with requirements for bank in the rest of the eurozone. That will reduce bank recap needs by 2.5 billion euros, while the inclusion of the whole of the deferred tax in banks’ capital, instead of just 20 percent, would save another 3 billion euros.

Athens is hoping to cover the 2014-15 funding gap of 14-15 billion euros using 3 billion euros from an interest rate reduction for its official sector loans and 4 billion from recycling the bonds given to banks in 2008, and by tapping the unused bank recap funds and the money markets through a limited bond issue. By doing so, the government believes it can avoid signing another memorandum with its creditors.

However, sources close to the negotiations say that creditors, led by the European Central Bank, disagree with the use of the excess recap funds for any other purpose, and are rejecting Greece’s requests concerning the Core Tier I index and the deferred tax. In addition, the ECB is against recycling the 2008 bonds. The country’s creditors are also yet to approve the bill for banks’ new share capital increases.

Government officials interpret the creditors’ attitude not only as their desire to for Greece to retain a safety cushion in the form of the unused recap funds, but also as a reason to prolong the strict monitoring of the country’s streamlining process, as illustrated by recent statements by German Finance Minister Wolfgang Schaeuble and SDP officials on a new bailout for Athens.

ekathimerini.com , Tuesday Jan 7, 2014 (21:46)  
Production of the new Pony to start by the end of the year, NAMCO says
Eurozone August inflation revised up to 0.4 pct
Sports events extend season of tourism
Gov’t to ask for subsidy return
Tsipras to meet with Pope Francis on Thursday
SYRIZA leader Alexis Tsipras will travel to the Vatican for a meeting with Pope Francis on Thursday according to reports. Social justice, unemployment, immigration and the Mideast crisis are...
A SYRIZA victory would spark a bank run, PM reportedly warns
A SYRIZA victory in an early general election would cause a bank run, Prime Minister Antonis Samaras has warned according to reports. “Given what [SYRIZA leader] Alexis Tsipras said in Thess...
Inside News
SOCCER
Mitroglou rediscovers scoring touch after Fulham let-down
Costas Mitroglou banished the memories of his disappointing spell in England after breaking a 10-month goal drought as Olympiakos Piraeus secured a thrilling 3-2 Champions League win over At...
SOCCER
Mitroglou seals Olympiakos´s 3-2 triumph over Atletico
Costas Mitroglou returned to scoring after 10 long months to seal a famous victory for Olympiakos in the Champions League as the Greek champion defeated visiting Atletico Madrid 3-2 on Tuesd...
Inside Sports
COMMENTARY
Loud patriotism
I admit that whenever politicians drag religious faith and worn-out patriotism into discussions I button up. I feel the same way when I see bishops blatantly getting involved in politics. To...
EDITORIAL
In need of a second wind
Greek Prime Minister Antonis Samaras and a few of his ministers have gone to great lengths to see Greece regain credibility in the eyes of its partners. Given that the state mechanism is not...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Production of the new Pony to start by the end of the year, NAMCO says
2. Eurozone August inflation revised up to 0.4 pct
3. Tsipras to meet with Pope Francis on Thursday
4. Mitroglou rediscovers scoring touch after Fulham let-down
5. A SYRIZA victory would spark a bank run, PM reportedly warns
6. Davutoglu calls for a two-state solution in Cyprus
more news
Today
This Week
1. Loud patriotism
2. In need of a second wind
3. Davutoglu calls for a two-state solution in Cyprus
4. A SYRIZA victory would spark a bank run, PM reportedly warns
5. Tsipras to meet with Pope Francis on Thursday
6. Eurozone August inflation revised up to 0.4 pct
Today
This Week
1. Greece on standby
2. A Greek God
3. Avramopoulos appointed Commissioner for Migration and Home Affairs
4. Central Athens traffic restrictions back in force on Monday
5. Greece at bottom of social justice scale among EU28
6. EU bank tests may miss trillion dollar risk, study finds
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.