Sunday 25 September 2016

Greek banks forced to wait for €25bn rescue

Balazs Koranyi and Tom Körkemeier

Published 13/08/2015 | 02:30

Greek banks remain under capital controls four weeks after the government called a referendum on a bailout plan offered by the European Union.
Greek banks remain under capital controls four weeks after the government called a referendum on a bailout plan offered by the European Union.

Greek banks will have restricted access to bailout funds until a fresh injection of equity to recapitalize them several months from now is approved, sources told Reuters yesterday.

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An initial €10bn will be made available "immediately" to shore up confidence in Greek banks, but it will be placed in a restricted account, at least until a "stress test" is finished by the middle or end of October, they said.

The European Stability Mechanism (ESM) - which provides financial assistance to euro-area member states experiencing financing difficulties - will be responsible for distributing this cash, if banks fall short of minimum capital requirements.

But no disbursement is expected for now as banks are seen maintaining adequate capital until the full €25bn outlined in the rescue package agreed between Athens and its international lenders are available, one source said.

Greek banks were closed for much of July and have been kept on a lifeline by the European Central Bank and are limiting cash withdrawals to a weekly €420 per customer to prevent a run.

But they have built up a €5bn liquidity buffer thanks to capital controls, indicating confidence is returning.

Greece this week agreed its third bailout deal, potentially for €86bn. (Reuters)

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