Return to ECB’s normal financing methods will follow bank recapitalization, says Greek banker

The recapitalization of Greece’s banks is being completed and the next step is to return to normal financing methods by the European Central Bank (ECB) and lift capital controls in the first quarter of 2016, the head of the Hellenic Bank Association and National Bank of Greece governor, Louka Katseli, said on Monday.

Katseli, speaking at the presentation of the Annual Greek Trade Report (2015), also said banks are now expecting the government’s proposal for the non-performing loans to achieve an effective framework, because “NPLs are a stranglehold for the banks”. The next step, she continued, is to achieve the return of bank deposits to lenders, adding however that all relevant parties must help build confidence.

Katseli also announced that all banks will soon announce a lowering of charges and fees for ordinary transactions with businesses, while she also reiterated her view on business clusters, noting that 89 pct of world trade takes place through value chains. “The challenge for all of us is to achieve extroversion,” she said.

New bank recapitalization was planned to secure interests of State-sources

The timely completion of the recapitalization of Greece’s systemic lenders has averted the risk of a “haircut” on bank deposits which would have led to the collapse of the economy, sources from the Government Vice-President’s office said on Monday.

The sources noted that, from 2016, a new EU directive will come into force which leaves deposits over 100,000 euros uncovered, if a bank is unable to collect funds from the market to cover its capital requirements.

“The new recapitalization has been planned in a way that secures the interests of the State in the best possible way and may even lead to a total recovery of the amount allocated in this phase,” the sources said, adding that this was the reason the faster procedure of book building was chosen over the classical process of capital increase which “would not have been completed before the end of the year.”

They also said that all large banks were saved as if they hadn’t been able to cover their basic capital needs from private funds, they would have been “resolved”, an event that would scare off investors and significantly increase the cost of recapitalization for the Greek government and thus public debt.