Greek banks get 18 bln euros in recapitalization funds
Greece handed 18 billion euros to its four biggest banks on Monday,
the finance ministry said, allowing the stricken lenders to regain
access to European Central Bank funding.
The long-awaited
injection - via bonds from the European Financial Stability Facility
rescue fund - will boost the nearly depleted capital base of National
Bank, Alpha, Eurobank and Piraeus Bank.
"The bridge
recapitalization of the four largest Greek banks was completed today
with the transfer of funds of 18 billion Euros from the Hellenic
Financial Stability Fund (HFSF),» the finance ministry said in a
statement.
"This capital injection restores the capital adequacy
level of these banks and ensures their access to the provision of
liquidity funding from the European Central Bank and the Eurosystem. The
banks have now sufficient financial resources in support of the real
economy."
The finance ministry statement confirmed what an
official at the HFSF had earlier told Reuters. The HFSF was set up to
funnel funds from Greece's bailout programme to recapitalise its
tottering banks.
The HFSF allocated 6.9 billion euros to National
Bank, 1.9 billion to Alpha, 4.2 billion to Eurobank and 5 billion to
Piraeus. All four are scheduled to report first-quarter earnings this
week.
The news came as two government officials told Reuters that
near-bankrupt Greece could access 3 billion euros, left from its first
bailout programme, to cover basic state payments if efforts to revive
falling tax revenue fail.
"Our finance ministry efforts at this
time are focused on boosting revenue,» one official told Reuters. But he
added that if those efforts failed they would «examine all
alternatives, including the 3 billion euros from the first bailout».
Greek
state coffers are on track for a more than 10 percent fall in revenue
this month, a senior finance ministry official said last week. Officials
had warned the state could run out of cash to pay pensions and salaries
by end-June.
The 3 billion euros is held in an intermediate HFSF account.
Greece
has been struggling through a fifth year of recession and political
turmoil, triggered by an inconclusive vote this month that has fanned
fears the country could be forced to leave the euro zone.
The country's struggling banks have been among those hit hardest by the uncertainty, with a rise in deposit outflows.
Huge
write downs from a landmark restructuring to cut Greece's debt nearly
erased the capital base of its biggest four banks, which rely on the ECB
and the Bank of Greece to meet their liquidity needs, after savers
began pulling their cash out on fears that Greece could go bankrupt and
out of the euro zone.
Last week the ECB stopped providing liquidity to some Greek banks because their capital base was depleted.
With
access to wholesale funding markets shut on sovereign debt concerns,
Greek banks have been borrowing from the ECB against collateral, and
from the Greek central bank's more expensive emergency liquidity
assistance (ELA) facility.
Bleeding deposits, the country's
lenders have borrowed 73.4 billion euros from the ECB and 54 billion
from the Bank of Greece via the ELA as of end-January.
Together,
the sums translate to about 77 percent of the banking system's household
and business deposits, which stood at about 165 billion euros at the
end of March.
Funded by the euro zone and the IMF, the HFSF is due
to inject up to 50 billion euros into the country's banks in return for
shares which it hopes to sell some day.
The funds are part of a
second, 130-billion euro bailout Greece agreed this year with its euro
zone partners and the IMF to stave off bankruptcy.
So far the HFSF
has received 25 billion euros under the scheme and the 18 billion euros
it disbursed on Monday is its largest payout to banks.
Key
details of the recapitalisation plan for Greece's battered banking
sector, including the mix of new shares and convertible bonds to be
issued, and whether call options will be included as incentives, remain
unclear.
That framework is expected to be finalised after a government is formed, following a June 17 election.
[Reuters]
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