ECB lets local lenders tap cash

Local banks have officially returned to the European Central Bank cash pool after their capital boost on Monday with 18 billion euros? worth of bonds from the Hellenic Financial Stability Facility, ECB head Mario Draghi confirmed on Thursday.

The Italian banker also announced that the country?s four main lenders, National, Alpha, Eurobank EFG and Piraeus, would gradually be disengaged from the emergency liquidity assistance (ELA) of the Bank of Greece in association with the Eurosystem.

Last February, due to the private sector involvement (PSI) in the Greek debt restructuring, the ECB had stopped accepting Greek collateral for the supply of liquidity to the country?s banks.

Still, the PSI dealt a major blow to Alpha and Eurobank that they are yet to recover from, as their first-quarter results, issued yesterday, have shown. Alpha, the country?s second-biggest lender, recorded net losses of 107.8 million euros in the January-March period, and Eurobank, Greece?s third-biggest, reported losses of 236 million. In the same quarter last year, Alpha had posted net profits of 10.5 million euros, while Eurobank had registered losses of 5 million.

Both banks attributed the severe deterioration of their finances to the ?deep economic recession,? as Eurobank said in a statement, after reporting a 9 percent increase in provisions on a yearly basis, to 356 million euros. ?Impairment losses on loans amounted to 320.7 million euros,? announced Alpha, which is a rise of 23.2 percent from the first quarter of 2011.

Regarding the PSI process, the man who negotiated it on the part of Greece?s private creditors, Charles Dallara, reiterated on Thursday that the Greek restructuring cannot be repeated for Spain.

?Greece was unique. The size of the Spanish economy is too large for a private sector involvement,? the head of the Institute of International Finance told Dutch newspaper Het Financieele Dagblad.