Big lenders opt for liquidity plan

Greece’s major banks will take part in the government’s 28-billion-euro liquidity injection plan aimed at ensuring the uninterrupted flow of credit to the economy, said National Economy and Finance Minister Giorgos Alogoskoufis yesterday. «It has been confirmed that all large Greek banks, the four largest lenders, will participate in the broader plan that will boost liquidity,» said the minister, referring to National, Eurobank, Piraeus and Alpha banks. The government scheme provides capital injections via the sale of preferred shares to the state, guarantees on debt issuance and liquidity support. Alogoskoufis said banks would make use of all three facilities in the liquidity support scheme. «The implementation of the plan will help the Greek economy face the impact of the (global) crisis in the best way possible,» the minister said. Bank of Greece Governor Giorgos Provopoulos expressed optimism that the plan would keep the country’s credit expansion pace at 10 percent next year from 18.1 percent currently. Earlier he told shippers that the world financial crisis had exposed the economy’s structural weakness and that a «policy mix» to boost competitiveness was needed. «Greece’s economy after many years of strong and uninterrupted growth is today at a critical crossroads,» he said. «As international conditions show unprecedented deterioration, the macroeconomic imbalances and structural weaknesses of the Greek economy are more clearly evident,» the central banker said. He said high growth rates in the past were mainly fueled by domestic consumption, which outpaced the economy’s production capacity and potential output. Greece’s economic growth is expected to slow next year to an annual pace of 2.7 percent from 3.2 percent, according to the Finance Ministry. (Reuters, Kathimerini)