A Greek bank bond-exchange initiative being discussed by the government and the so-called troika would reduce the recapitalization needs of lenders by 9 billion euros, according to Eurobank Ergasias SA Deputy Chief Executive Officer Nikolaos Karamouzis.

The proposal is for Greek banks to be allowed to exchange their holdings of Greek government bonds for bonds issued by the European Financial Stability Facility that are held by the Hellenic Financial Stability Fund, or HFSF, without any discount in face value, Karamouzis said in a speech late on Thursday in Cyprus, according to a transcript of his comments sent yesterday by Athens-based Eurobank.

Such a deal “would improve the net position of the banks and would also significantly reduce the dilution of current shareholders,” Karamouzis said.

The move and another initiative being discussed by the government and the European Commission, the European Central Bank and the International Monetary Fund -- known as the troika -- to allow the recognition of deferred tax, arising from losses on the write-down of Greek government debt, as capital reserve would be “especially favorable” for private shareholders, he added.

Greece has been told to overhaul its banks after lenders sustained losses on their holdings of Greek government bonds in the country’s debt swap, the biggest sovereign restructuring in history.

The country obtained a 130-billion-euro bailout from the European Union and the IMF in March, which earmarked 50 billion euros for recapitalizing the banks.

Greece’s four biggest lenders have already received 18 billion euros from the 50-billion-euro amount and will need to get a further 9 billion euros when the country receives its next loan tranche, he said.

“Based on what we know today the capital increases will happen during the first quarter of 2013,” Karamouzis said.

[Bloomberg]