ECONOMY

Credit sector bracing for decision time

credit-sector-bracing-for-decision-time

The creditors’ plan for Greek banks provides for their recapitalization using between 10 and 25 billion euros, while deposits up to 100,000 euros will remain protected.

Also, during the course of Monday, the government will issue a new legislative act extending the bank holiday for more days, according to banking sources, having started two weeks ago.

The same sources add that unless the European Central Bank extends the limit on emergency liquidity assistance (ELA) or the legislative act decreases the maximum amount of cash that can be withdrawn from the current 60 euros per person per day, there will not be enough cash to last until the end of the week.

The ECB Governing Council will convene again on Monday to discuss the Greek request for an increase in the ELA limit, but banking sources consider it highly unlikely that will happen before a conclusive agreement between Athens and its creditors.

However, it is also unlikely the ECB will proceed to another haircut on the value of the Greek banks’ collateral, or a stop to the ELA provision. As European Commission Vice President Valdis Dombrovskis noted on Sunday, “discussions continue, but all signs point to the ECB providing security to Greek banks for the coming days and weeks.” He added that “although the ECB is independent and makes its own decisions, the coverage of the needs of Greek banks was and remains part of the talks.”