Greece wants lenders to agree bailout review without bank deal

ATHENS Wed Mar 5, 2014 2:49pm EST

Greece's Finance Minister Yannis Stournaras arrives for a news conference at a ministry hall in Athens April 16, 2013. REUTERS/Yorgos Karahalis

Greece's Finance Minister Yannis Stournaras arrives for a news conference at a ministry hall in Athens April 16, 2013.

Credit: Reuters/Yorgos Karahalis

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ATHENS (Reuters) - Greece has asked its international lenders to approve its latest bailout review despite an unresolved dispute over how much new capital its banks need, a senior finance ministry official said on Wednesday.

Greece no longer expects an overall deal with the lenders by next week, the official said.

In further signs of friction over the bailout, Greece will release the results of its second health check on its banks later this week, without the formal approval of the 'troika' of lenders, a central bank official said.

The row over how much extra funds Greek banks need after a health check up, along with delays in implementing changes meant to make the economy more competitive, have been the main stumbling blocks delaying the approval of further aid.

The Bank of Greece sees the top banks needing 5.8 billion to 6.2 billion euros ($8 billion to $8.5 billion) in extra capital after the stress test but the troika of international lenders has put the need at 8-8.5 billion euros, a source close to the talks has told Reuters.

"The disagreement between the troika and Greece on banks should not be the reason not to conclude the review," the official said, declining to be named.

"This means that Greek banks will be recapitalized based on the Greek central bank's (stress test) results. When the European Central Bank's stress tests come out, and if there is a difference, then additional capital will be provided," the official said.

"The final settlement will come with the ECB stress test results."

But the IMF is resisting that plan, the official said.

The central bank is keen to release the stress test results to remove market uncertainty. Estimates on banks' capital needs have ranged widely - from 4.5 billion to 15 billion euros. Greece also wants to speed up the delayed privatization of its third biggest lender, Eurobank.

Without an overall agreement with its lenders, Athens will seek a statement of political support at Monday's meeting of euro zone finance ministers, to note that there has been progress on many fronts albeit with some remaining open issues, another official said.

"The final decision could be taken later, with an extraordinary Eurogroup or even via teleconference," the official said, declining to be named.

Greece's bank rescue fund (HFSF), which recapitalized the top four banks last summer, has a remaining buffer of about 8 billion to 9 billion euros to address any additional needs, the central bank has said.

Athens, which has been bailed out by the European Union and IMF twice since 2010, has no pressing funding needs until May when bond payments of nearly 10 billion euros are due. At least 8 billion euros would be released under the bailout once there is a deal. ($1 = 0.7278 euros)

(Reporting by Lefteris Papadimas; Additional reporting by George Georgiopoulos; Writing by George Georgiopoulos; Editing by Ruth Pitchford)

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Comments (1)
GreekAnalyst wrote:
The Greek Government would not easily accept anything other than a “Greekstatistic” upwards pressured evaluation, especially since there is an upcoming double elections in Greece in a few months (with polls showing a severe defeat). The truth is far from good thought. a) Unemployment is stabilized at around 30%. This is even more dangerous, since part time work is substituting full time, low salary workers the higher paying ones and young Greeks are abandoning efforts to find low paying jobs within the country and are migrating, b) Greek income levels have been further reduced, c) Absurd property taxes (based on pre crisis values of higher than 1.5x) and other taxes are struggling people. There is an irony joke in Greece, that if a kid misbehaves the parents threatens that he will “transfer the house to it” (so he cant pay and go to jail), d) Citizens are fed up with corruption scandals that are not being investigated by politically controlled Justice and Tax authorities. In an irony situation, corrupted Greeks transferred “black market” cash abroad in 2010 – 2012 while the country was facing default (Private deposits were reduced from 240 billions to 160 billions since 2009) and all data are in the hands of the authorities and banks, who just don’t check them! It’s a Greek reality whatsoever, since the two corrupted political parties who led Greece to this situation have actually colluded to form the current Government. Even in the famous scandal of the “Lagarde list” that involved the ex Greek Minister of Economics, the current Vice Presidet and the Head of Tax Authorities, no one has been arrested. “House of Cards”, may seem really innocent when it come to deal with Greek politicians. EU is pretending to be blind to all these in order to save the euro, in the expense of morality and ethicality. Greek citizens should not continue to be blamed for the country’ state, especially since in Greece, behaving ethically was only considered “stupid”. e.g. if 100 people that you knew, had political acquaintances and were stealing millions and no-one was arresting them, but they were rewarded for this, would you really feel “guilty” if you didn’t issue a tax receipt as a store owner? Even so, the Greeks that were not corrupted are the ones that have Marjory paid for their values. Before the crisis and even today. Although, we may abandon the country this distortion of the truth in Greece should not be allowed, since no moral person (“a ship”) will manage to survice there, next to the “wolves”.

Mar 05, 2014 6:02pm EST  --  Report as abuse
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