Stournaras pours cold water on lenders’ recap revamp
In an interview with Bloomberg, Finance Minister Yannis Stournaras dashed expectations regarding prospects for significant changes to the bank recapitalization process while denying there was a plan for the creation of a single “bad” bank, saying that there is no such provision in the law.
Stournaras stressed that it is not easy to change the law on recapitalization, adding that all of the advantages of the existing plan will be used. He explained that a change to the recap law would require the approval of both the country’s international creditors and the Greek Parliament, which would not be easy.
Regarding the risk of the nationalization of banks, he pointed out that even in Britain a large part of the credit system has been nationalized. “The state will participate with a large amount but that does not mean the state wants to run the banks. You can have stability through the participation of the Hellenic Financial Stability Fund, but that does not mean there’s going to be everyday interference in the management of the banks.”
As for the possibility of the creation of a big “bad” bank that would incorporate all the problematic elements of the domestic banking system, Stournaras stated that the planning and the law do not allow for the creation of such a special-type lender. He brought up the fact that there are already such banks operating with the problematic arms of ATEbank and Hellenic Postbank, which are currently being liquidated. Nevertheless, he noted that the creation of a single bad bank has been proposed to the government, an idea that might be examined again in the future.
In the same interview, the Greek finance minister stressed there is no further room for austerity in Greece and called for a quick resolution to providing international financing for Cyprus. “Although Greek banks now will be fortified with the recap plans, yes, still Cyprus presents a problem,” he said. “So I’m sure we’ll find a solution through the Eurogroup soon. The sooner the better.”
