Connect to share and comment

Greek banks to be recapitalised separately: central bank

PlacardEnlarge
(Globalpost/GlobalPost)

Greece's central bank on Sunday said the country's main four lenders would be recapitalised separately, a move that raises questions about a planned merger between two of them.

"The Bank of Greece confirms that the recapitalisation process for the four systemic banks (National Bank, Alpha, Eurobank, Piraeus) is proceeding normally and will conclude in April in any case," the central bank said.

"All four banks have already called -- or will call in the coming days -- shareholder meetings to approve capital increases," it added.

National Bank and Eurobank are in an advanced merger process that foresaw a joint recapitalisation.

But Greece's creditors -- the EU, IMF and the European Central Bank -- had reportedly expressed concern that the new entity would both dominate the Greek market and would be tough to recapitalise.

"(The creditors) do not like the creation of such a major player with a market share of around 40 percent," Bank of Greece governor George Provopoulos said in a recent televised interview.

"The troika says, and I can also say, that there will be a greater difficulty in a combined National Bank-Eurobank entity, with capital needs in the order of 1.5 billion euros or slightly higher, a very large sum under the current circumstances. So there is a concern that if private investors cannot be found, it will come under state control," he told state television NET.

The Bank of Greece announcement came after new talks between the creditor representatives and Prime Minister Antonis Samaras on Sunday.

Their report will determine whether Athens will receive a loan disbursement of 2.8 billion euros pending since March.

The recapitalisation of Greek banks, who took a major blow last year in helping the country reduce its sovereign debt, is a condition for the continued release of EU-IMF rescue loans for Greece's crisis-hit economy.

A sum of 50 billion euros out of the total EU-IMF bailout fund of 240 billion euros has been earmarked for this purpose.

At least 10 percent of new capital must come from private investors to keep the banks from being effectively nationalised.

jph/bm

http://www.globalpost.com/dispatch/news/afp/130407/greek-banks-be-recapitalised-separately-central-bank