ECONOMY

Banks give lukewarm support to recap plans

Banks were disappointed by the government?s plan for their recapitalization presented to them by Finance Minister Yannis Stournaras on Monday.

Banking sources told Kathimerini that as things stand it will be exceptionally difficult, if not impossible, to attract private investors to take part in the share capital increases.

Stournaras ruled out the possibility of banks exchanging their bonds, while the issue of guarantee supply through the European Financial Stability Facility (EFSF) was not discussed.

It was also agreed that banks will get a one-month extension to the deadline for the submission of their financial reports, which expires on Wednesday. The new deadline will allow them to factor in the next bailout tranche.

Bank officials warn that while the main issue is the re-entry of private capital into the economy, the recapitalization process means the government is risking a de facto nationalization of the credit system, with bad loans soaring that taxpayers will be asked to cover.