GREECE: Greek banks will receive an injection of 18 billion euros, head of Bank of Greece George Provopoulos says at talks with President Karolos Papoulias

Record ID: 566391

  • Title: GREECE: Greek banks will receive an injection of 18 billion euros, head of Bank of Greece George Provopoulos says at talks with President Karolos Papoulias
  • Date: 25th May 2012
  • Summary: ATHENS, GREECE (MAY 24, 2012) (REUTERS) PRESIDENTIAL PALACE VARIOUS OF PRESIDENTIAL GUARD MARCHING NEAR PALACE GREEK FLAG ON PALACE.
  • Embargoed: 9th June 2012 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: Economy,Domestic Politics
  • Reuters ID: LVA1SWQKE5WMQDNSPXGGZCDXRVH2
  • Story Text: Greece's four largest banks will get an 18 billion euro capital injection by Friday (May 25) or Monday (May 28), the country's central bank chief said on Thursday (May 24) during talks with Greek President Karolos Papoulias.
    "In a period of great uncertainty, like the one we have now, it is very important that the funding of 18 billion euros is disbursed to Greek banks. And it is a positive (sign). (The funds will be here) tomorrow or on Monday," Bank of Greece head George Provopoulos said during a meeting at the presidential palace.
    Earlier this week, Greece's bank stability fund approved the recapitalisation that will allow the banks to return to funding from the European Central Bank, which cut off some Greek lenders last week because they lacked enough capital to be considered solvent.
    "There have been bank deposit outflows until now, which means outflows from the Greek economy, but I believe if trust returns, the trend will be reversed," Provopoulos told the President on Thursday.
    The European Central Bank gave its backing to Greece's plans to recapitalise its banks on Wednesday (May 23) but raised a number of key questions about how the fund set up to do the job will work.
    Athens has set the Hellenic Financial Stability Fund (HFSF) as a capital backstop to bolster its viable banks. Funded by the euro zone and the IMF, it will inject up to 50 billion euros into banks in return for shares which it hopes to sell one day.
    While generally supportive of the plans and welcoming the way Greece intended to take shares in rescued banks, the ECB warned the HFSF should not interfere with the Greek central bank's responsibility to determine which banks should get aid.
    At the same time European Union leaders, advised by senior officials to prepare contingency plans in case Greece decides to quit the euro zone, urged the country on Wednesday (May 23) to stay the course on austerity and complete the reforms demanded under its bailout programme.
    The statement came after an informal summit in Brussels, where the leaders discussed the ways to revive their economies, with growth and jobs on the agenda along with the situation in Greece.
    "I believe that growth is a result of our decisions here in Athens and not in Brussels. The issue of growth will be raised here, we have a lot to do and, perhaps, we are delaying (the issue of growth) while we are engaged in other matters," Provopoulos said referring to the country's political turmoil caused by parliament elections on May 6, after which the parties failed to form a government coalition. The three-day party talks ended with no result, requiring Greece to start preparing for a new election in June, amid fears of euro zone exit.
    In its monthly report, Germany's Bundesbank said the situation in Greece was "extremely worrying" and it was jeopardizing any further financial aid by threatening not to implement reforms agreed as part of its two bailouts.
    It said a euro exit would pose "considerable but manageable" challenges for its European partners, raising pressure on Athens to stick with its painful economic reforms.
    Greek officials have said that without outside funds, the country will run out of money within two months and there remains the threat that if it crashes out of the euro zone; other member states could be brought down too.
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