Absorption of branches awaited

The Greek government and the country’s main banks were eagerly watching developments in Cyprus on Thursday, with Finance Minister Yannis Stournaras showing that Athens’s patience is wearing thin regarding the absorption of Cypriot lenders’ Greek branches by local banks.

Speaking after an afternoon meeting with Prime Minister Antonis Samaras, Stournaras said that if Cyprus fails to present an alternative plan to open its banks in Greece immediately, “Greece will do what it has to do.”

He acknowledged that as long as the Cypriot banks remain closed in Cyprus their Greek branches must also do likewise in Greece, but “this cannot go on for too long.”

He voiced Greece’s support for Nicosia’s decisions and stressed that Athens has a plan for the acquisition of Cypriot banking activity in Greece ready and is waiting to implement it.

The government intends to settle the issue of the Cypriot branches’ absorption on Friday, so that they can reopen next Tuesday under their new owner, which will take in the loan portfolios and deposits of Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank in Greece.

Later on Thursday the Systemic Stability Council convened to discuss the issue of Cyprus in the presence of Stournaras, Bank of Greece Governor Giorgos Provopoulos, Capital Market Commission chief Costas Botopoulos and representatives from the state privatization fund (TAIPED).

Meanwhile ratings firm Standard & Poor’s cut Cyprus’s sovereign credit rating by one notch on Thursday night, citing “acute problems” in the island’s banking sector. S&P lowered the rating to CCC from CCC+ and warned that the outlook was negative.

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