Greek bank rescue fund will have money left over
Greece’s bank rescue fund will have as much as 7 billion euros left over after country’s four big banks are recapitalized, the central bank governor said on Wednesday.
Greece’s four biggest banks need 27.5 billion euros to plug capital holes after losses on government debt writedowns and bad loans following the financial crisis.
The money will mostly come from the Hellenic Financial Stability Fund (HFSF). With their solvency restored, the aim is for banks to regain access to capital markets and help fund the economy out of its deep six-year slump.
The HFSF is funded with 50 billion euros from the country’s European Union/IMF bailout to cover the costs of the capital injections and winding down smaller banks that authorities have deemed non-viable.
“From the package of 50 billion, we expect there will be a sum left over as a cushion that may reach 7 billion, between 6 to 7 billion euros,” Bank of Greece Governor Giorgos Provopoulos told the Greek parliament’s economic affairs committee.
This money could be used if there was any deterioration in economic conditions.
The central bank’s outlook is that a recovery will gradually emerge next year after six straight years of recession.
The recapitalization of Greece’s top four banks – National, Alpha, Piraeus and Eurobank – will be completed later in June. Under the recapitalization scheme agreed with Greece’s international lenders, at least 10 percent of new equity issues by the four banks must be bought by the market for them to stay privately run. [Reuters]
