Lending may soon return to normal

Solid demand in National Bank’s (NBG) share capital increase reflects increased confidence in Greece, paving the way for a possible return by Greek lenders to interbank lending in the coming months, NBG’s CEO Apostolos Tamvakakis said yesterday. Demand for a 1.8-billion-euro rights issue and bond offering, which wound up earlier this week, reached 1.8 times the offered amount in a cash call aimed at boosting NBG’s capital position as the local economy moves deeper into recession. Tamvakakis said 208,000 shareholders from 77 countries took part in the share capital hike in what was the first vote of confidence shown in Greece after the sovereign debt crisis brought the country to the brink of bankruptcy earlier this year. «We believe that international lines of finance to the Greek banking system will start to open slowly. It wouldn’t be impossible for this to happen within the year,» Tamvakakis told reporters after meeting with Prime Minister George Papandreou yesterday. «This will mean less reliance on the European Central Bank [ECB] and then the rolling over of funds into the market.» Shut out of wholesale lending markets due to their exposure to junk status Greek bonds, local lenders have been increasing their reliance on the ECB to meet their liquidity needs. However, data released on Thursday showed that their reliance on the Frankfurt-based lender had declined in September for a second straight month. Greek lenders held a total of 94.3 billion euros for refinancing operations compared with 95.9 billion euros in August, according to figures from the Bank of Greece. Although this figure is still considered to be very high, analysts described the decline as being positive, indicating that an outflow of deposits from Greek banks is likely to have stabilized.

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