Greece’s securities regulator has extended a short-selling ban on bank shares to the end of July to protect investors while the recapitalisation of the country’s cash-strapped lenders is completed.
Short-selling involves investors borrowing shares to sell on the market and later buying them back at a lower price to make a profit. Greek banking stocks have been heavily shorted as investors bet that stock prices would fall further during the country’s sovereign debt crisis.
“The board took into consideration the ongoing bank recapitalisation process,» the Capital Markets Commission said in a statement, confirming an earlier Reuters story.
A short-selling ban on all stocks was introduced in August 2011 to protect investors from the fallout of the country’s debt crisis. Greece scrapped the ban on short selling non-banking stocks in January as market confidence grew after the country averted bankruptcy last year.
The regulator said that the three-month extension has been approved by the European Securities and Markets Association (ESMA).