ECB’s Dombret Says Greek Banks to Open Only After Fresh Capital

Greek banks should be re-opened for business only after they’ve received fresh capital and central-bank funding is assured, said Andreas Dombret, a board member of the European Central Bank’s Single Supervisory Mechanism.

“Firstly, it must be guaranteed that Greek banks will be sufficiently recapitalized within the framework of a new aid program,” Dombret said according to the text of a speech in Munich Wednesday released by Germany’s Bundesbank, where he’s also a member of the board. “Secondly, it must be ensured that there is enough available liquidity, should depositors want to withdraw more money after the opening of the recapitalized banks.”

Given that negotiations currently taking place in Brussels over the shape of interim financing for Greece have to be concluded before talks on a third bailout package can begin, Dombret’s comments signal that the ECB doesn’t think Greek lenders can re-open imminently. Banks have been closed since capital controls were imposed on June 29.

Greek lenders have suffered deteriorating asset quality and a loss of deposits, since the Syriza-led government came to power in January. EU leaders agreed on July 13 to earmark up to 25 billion euros ($27.6 billion) for bank recapitalization, to be paid back by the proceeds of privatization.

“We should orient ourselves according to this number, but test it against a thorough balance assessment,” Dombret said. “Should the need be higher than expected there must be the possibility of revisiting it.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE