Greece to lift short-selling ban on bank stocks in August, sources say

Greece’s securities watchdog plans to lift a short-selling ban on bank shares in August, after the country’s top lenders complete share issues to plug capital holes, a senior official at the regulator told Reuters on Wednesday.

The ban, which expires end-July, was applied to protect investors during the recapitalisation of the country’s major banks, which was completed on Tuesday.

Short-selling involves investors borrowing shares to sell on the market and later buying them back at a lower price to make a profit.

“The intention is to lift the restriction once the recapitalisation is completed,» said the official who declined to be named. The move has been agreed with the European Securities and Markets Association (ESMA), the official said.

A short-selling ban on all stocks was introduced in 2011 to protect investors from the fallout of the country’s debt crisis. Greece scrapped the ban on non-banking stocks in January as market confidence grew after the election of a pro-bailout government, but kept the restriction on bank stocks in place.

Greece’s four biggest banks – National, Alpha, Piraeus and Eurobank – were in need of 27.5 billion euros to repair their solvency after losses on sovereign debt writedowns and bad loans.