But Athens must decide whether to pay out, default or propose a different offer to holders of a 450 million euro bond that is due to expire on May 15. // "We have room to decide until May 30 as there is a grace period of 15 days," the official said. (Reuters

"We have room to decide until May 30 as there is a grace period of 15 days," the official said. (Reuters Greek banks to get EFSF bond bridge before full recap

28 Apr 2012

Greece's banking sector, all but brought to its knees by the bond swap, now looks to EU funds for help Greece's cabinet on Friday agreed a state bank support fund would provide the country's four big banks with 18 billion euros worth of European bonds as an interim solution until they are recapitalised later in the year, a government official said. Huge bond swap writedowns to cut the country's debt nearly wiped out the capital base of National Bank, Alpha , Eurobank and Piraeus, which need to meet a 9 percent Core Tier 1 capital ratio target by September. "The cabinet approved a legislative act, a bridge recapitalisation, to allow the Hellenic Financial Stability Fund (HFSF) to allocate EFSF bonds to banks to help them with their liquidity needs," the government official said, referring to the European Financial Stability Facility. The sector's recapitalisation may be pushed back until the end of the year, another official said. The bridge support will boost banks' regulatory capital. Details on how this will be carried out will be decided at a future cabinet meeting, the official said. Athens is working with EU/IMF officials on technical aspects of a recapitalisation plan for its banks, likely to be unveiled after a May 6 national election. About 50 billion euros ($66 billion) have been earmarked in Greece's second bailout to prop up its struggling banking sector. Another official said that any decision by Athens on bondholders refusing its debt exchange offer will be taken only with the consent of euro zonefinance ministers and will likely be taken only by the new government. "Any decision we take on holdouts will have the approval of the euro zone," the official said. Greece has completed a mammoth bond swap that formed part of its second international bailout, restructuring about 199 billion euros of its debt. The participation rate in the swap reached 96.9 percent. But Athens must decide whether to pay out, default or propose a different offer to holders of a 450 million euro bond that is due to expire on May 15. "We have room to decide until May 30 as there is a grace period of 15 days," the official said. (Reuters) http://www.athensnews.gr/portal/11/55224