ECONOMY

Fitch sends warning to Greek banks

Greek banks will have to face the major challenge of returning the funds they have drawn on as part of the extraordinary measures provided by the European Central Bank (ECB), international rating agency Fitch suggested yesterday. It warns that this could prove to be a very difficult proposition, one that could have an impact on the rating of the country’s banks in the medium term. However, Fitch notes that it is less worried about the major Greek banks and their short-term funding, given that their obligations for refunding are limited within 2010 and considering the considerable slowdown in the rate of credit expansion. Domestic banks’ dependence on ECB funding, at a time when the extraordinary measures to bolster cash flow have begun to gradually recede, will render the adjustment of funding sources for the country’s lenders more difficult. In this context, Fitch warns that banks will have to strengthen their total cash flow. It also notes that at least Greek banks have a healthy local network of retail banking.