There was no progress in the Thursday meeting between Finance Minister Yannis Stournaras and the Hellenic Bank Association regarding the issues of the bond buyback plan and the sector’s recapitalization.
Neither Stournaras nor the association’s head, Giorgos Zannias, made any statements after the meeting. Kathimerini understands that the representatives of the credit sector expressed opposition to the buyback plan, stressing that it would lead to the loss of the banking system’s private character. That in turn would have serious implications for the economy itself and the rebound effort, as it would send a negative message to investors and the markets.
The association’s representatives suggested that bank stakeholders have already suffered huge losses as a result of the original debt haircut (PSI) earlier this year and that the buyback would constitute a disproportionate burden for them.
They went on to present two alternative proposals to the minister, which they argued would reach the target of reducing the country’s debt without the economic exhaustion of stakeholders: The first concerns swapping the Greek state bonds banks hold with European Financial Stability Facility (EFSF) bonds, either directly or through the Hellenic Financial Stability Fund (HFSF); the second is less drastic and provides for a partial participation in the buyback, with the government exempting the PSI losses from tax, which could lead to a benefit of about 3 billion euros for banks.
Stournaras is said to have reiterated the need for the buyback plan to succeed, and reminded bankers that such alternatives have already been rejected by the European Central Bank and the European Commission. However, he did say he would examine the tax proposal.
The bank chiefs emerged from the meeting disappointed as they realize that despite the unfair losses they will incur, “there are no alternatives left,” as one of them put it.