The story appears on

Page A11

June 6, 2011

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Economy

Greek banks to lift capital ratio

THE Bank of Greece, the central bank, plans to ask banks to boost their capital adequacy ratio to ease market fears over the impact of a haircut on Greek government bonds they hold, a Greek newspaper said yesterday.

Battered by the country's debt crisis, Greek lenders have lost access to interbank funding and became dependent on the European Central Bank for liquidity. Central bank authorities want to gradually wean them off this facility.

"The head of the Bank of Greece, after the results of stress tests at the end of June, will ask banks to strengthen their Core Tier 1 ratios," Kathimerini newspaper said, citing banking sources.

The minimum ratio of Core Tier 1 equity and reserves capital to risk-weighted assets the central bank will require will depend on the haircut assumption it will make as regards bank's holdings of Greek government bonds.

"This does not mean that the Bank of Greece accepts there will be a haircut. On the contrary, as a member of the European Central Bank it is against any type of debt restructuring," Kathimerini said.

It said the central bank believes a stronger equity base may make banks' return to wholesale funding markets easier and limit their recourse to eurosystem facilities as Athens implements a fiscal plan.

So far, National Bank and Piraeus Bank have already boosted their capital with cash calls and EFG Eurobank has sold most of its stake in Polish subsidiary Polbank to Raiffeisen.

Alpha Bank also plans a convertible bond and a rights offering of up to 2.5 billion euros (US$3.66 billion) and will seek approval at its annual meeting.

Banks that find it hard to beef up their capital to meet the new requirement may have to turn to the Financial Stability Fund - a 10 billion euro safety net, the paper said.





 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend