ECONOMY

ESEE fears over ECB rate hike

The National Confederation of Hellenic Commerce (ESEE) suggests that Greek traders will be hit hard by the European Central Bank?s recent interest rate hike.

The 0.25 percent rise in the key rate will entail a 348-million-euro annual burden on Greek commercial enterprises, ESEE forecast on Friday.

It added that if the scenario of successive hikes by a total of 0.75 percent within 2011 proves true, then the burden will add up to 1.02 billion euros. The rate hike will largely depend on inflationary pressures.

Greek banks are also worried, as two-thirds of private loans are of the floating rate type, which will lead to a rise in nonperforming loans and push banks? provisions above today?s 31 billion euros, or 12 percent.

The ESEE analysis further suggests that the state stands to undertake an additional burden of 1 billion euros for its loans from the eurozone with this 0.25 percent rate hike, while the expected 0.75 percent rise will entail 3 billion euros more being paid in interest.