Nouy Says Greek Bank Recapitalization Deadline Poses Challenge

  • ECB ready with results of asset quality review and stress test
  • Private sector has little time to decide if it will take part

Greece will have to rush to meet a year-end deadline to inject fresh equity into its lenders because officials are running short of time to attract private investors, European Central Bank Supervisory Board chair Daniele Nouy said.

The ECB has completed its study of how much extra capital Greek lenders need and will decide on when to release the information “in the coming hours and days,” Nouy said in an interview in London.

“I have seen that investors have already approached the Greek banks and are making up their minds on what they want to do,” Nouy said. “The schedule foreseen is to have the recapitalization by the end of the year, which is quite challenging because indeed the private sector should be given some time to decide whether they want to be part of it or not.”

The ECB review came after Prime Minister Alexis Tsipras’s six-month battle with Greece’s creditors brought the financial system to the brink of collapse. The government has said filling the capital hole identified will pave the way for it to lift capital controls next year. ECB President Mario Draghi said in a letter to a Greek lawmaker released Thursday that he expects the process to be completed on time.

If shareholders can plug any potential holes that the inspectors identify in their baseline scenario, the senior bondholders won’t be asked to take any losses, Hellenic Financial Stability Fund CEO Aristides Xenofos said last month. The HFSF, Greece’s state-run bank-recapitalization agency, could cover additional capital shortfalls in the stress tests’ adverse scenario, he said.

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