ECB to say how much Greek banks need to survive

Fri Oct 30, 2015 7:06pm EDT
 
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By John O'Donnell

FRANKFURT (Reuters) - The European Central Bank is expected to say on Saturday that Greek's battered banks need up to 14 billion euros ($15.4 billion) in fresh capital in order to survive.

It comes after years of economic decline in Greece - bailed out three times by international lenders - that has forced some 42 billion euros to be set aside against bad loans.

Although the banks are currently been kept afloat by access to money through the euro zone monetary system, there is a rush to get recapitalization completed.

If it is not done by the end of the year, new European Union rules mean large depositors such as companies may have to take a hit in their accounts.

The announcement, to be made at 0930 GMT, follows a series of stress tests on the banks to see how they are faring after the long-running dispute over reforms demanded of Greece for international support.

The four main banks concerned are National Bank of Greece (NBGr.AT: Quote), Piraeus (BOPr.AT: Quote), Alpha Bank (ACBr.AT: Quote) and Eurobank(EURBr.AT: Quote) .

This bailout stand-off between leftist Prime Minister Alexis Tsipras and his country's international backers - the International Monetary Fund and European Union - almost saw Greece tumble out of the euro zone.

It led to the freezing of central bank funding for Greece's banks and forced controls on cash withdrawals. Although the latter helped stem a further hemorrhaging of savings, it squeezed the economy, making it harder for borrowers to repay loans.   Continued...

 
A piggybank painted in the colours of the Greek flag stands amongst various euro coins in front of letters spelling the word 'GREECE' in this picture illustration taken in Berlin, Germany June 30, 2015. REUTERS/Pawel Kopczynski