ECONOMY

Recap law to be voted next week

recap-law-to-be-voted-next-week

The law on the recapitalization of banks is expected to clear Parliament by the end of next week, as it was announced after a cabinet meeting on Thursday that the bill is ready and will be put up for public consultation early next week.

Government sources said that “the issue of the recapitalization timetable is exceptionally important for the government, as the process will have to be completed soon, and in any case before the end of the year.” The government’s aim is to make sure that this will be the last recapitalization process for Greek banks, saying in a statement that “the condition for a successful recap is its combination with the management of the matter of nonperforming loans, and with radical changes to the administration and operation of banks.”

The timely completion of the recapitalization was also stressed on Thursday by the president of the European Central Bank, Mario Draghi, in response to a question by a Greek MEP.

He said the full and timely completion of the process is the main condition for the restoration of confidence in the Greek economy.

Meanwhile, bank officials say that the results of the stress tests on Greek banks have already been confirmed, and that it is just a matter of days before they are published.

Bankers expect to be able to draw the amount of around 5.5 billion euros from the market that all four systemic banks will require between them to avoid being nationalized.

They say there is significant interest on the part of investors, but add that the new framework for the recap process will have to be presented as soon as possible.

The key factors for investors’ participation concern the implementation of the bailout program with the application of reforms, and the way that nonperforming loans will be managed – it is vital, bank officials say, that this problem is tackled in a way that does not harm the capital base of lenders.

They add that there has been no major impact on the course of NPLs in the last few months from the capital controls on bad loans.