Lenders under closer control

A Finance Ministry bill submitted to Parliament late on Thursday provides the Bank of Greece with vastly increased supervisory powers over commercial banks, with a view to ensuring the stability of the country?s banking system and protecting depositors? assets.

The bill envisages the appointment of commissioners, and the possibility of a break-up of banks facing gaps in the mandatory capital ratios, with the transfer of assets and liabilities to a new, transitory entity. If the value of liabilities transferred exceeds the value of assets, the difference will be covered by the Deposits and Investments Guarantee Fund. The license of the new entity will initially be given for two years and its share capital paid by the government?s Financial Stability Fund. The license of the original bank will be revoked, its shares annulled and it will go into liquidation.

The central bank will be empowered to demand share capital increases in banks, while the commissioner will be able, in extreme cases, to take over the management.

A commissioner was recently appointed in Proton Bank, who found questionable capital transfers within the group.

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