Facing cash crunch, Greece set to tap into bank rescue fund - sources

Tue Mar 10, 2015 8:13am EDT
 
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By George Georgiopoulos

ATHENS (Reuters) - Greece is set to tap into more than half a billion euros of funds sitting in the country's bank rescue fund as it scrambles to find money this month amid a cash crunch, banking and government sources told Reuters on Tuesday.

Shut out of debt markets and with aid from lenders on hold, Athens risks running out of cash in the coming weeks after a steep fall in state revenues.

The government faces a 1.5 billion euro ($1.6 billion) loan repayment to the International Monetary Fund this month and has to refinance some 3.2 billion euros of maturing short-term treasury paper.

To help ease the looming crisis, the government plans to take 555 million euros sitting at the Hellenic Financial Stability Fund (HFSF) -- the bank rescue vehicle that was used in 2012 to recapitalize its main lenders.

Greece's four top banks -- National (NBGr.AT: Quote), Piraeus (BOPr.AT: Quote), Eurobank (EURBr.AT: Quote) and Piraeus (BOPr.AT: Quote) -- handed over this money in commissions following their recapitalization.

"This is money for which there is no other claim, it is available for the government," a senior banker with direct knowledge of the matter told Reuters, declining to be named.

"The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue," the banker added, referring to the euro zone rescue fund. He said it was up to the government to decide when it withdraws the cash.

The HFSF, funded from the country's EU/IMF bailout with 50 billion euros, recapitalized lenders with European Financial Stability Facility (EFSF) bonds, which banks can still use as collateral for direct funding from the European Central Bank.   Continued...

 
A Greek flag flutters between Saint George's bell tower and an olive tree atop the Lycabettus hill March 6, 2015. REUTERS/Yannis Behrakis