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Greece Sets Terms for Aiding $15.9 Billion Bank Recap

  • Banks face skeptical investors in quest for fresh capital
  • Lenders need to raise funds following economic debacle
A European Union (EU) flag, left, flies beside a Greek national flag in front of the Parthenon temple on Acropolis Hill in Athens, Greece.
Photographer: Yorgos Karahalis/Bloomberg
Updated on

Greece’s government detailed under what terms it will help banks plug a 14.4 billion-euro ($15.9 billion) hole in their books identified by the European Central Bank, paving the way for the lenders to seek cash from investors for the second time in 18 months.

The ECB expects the banks to raise at least 4.4 billion euros from shareholders and bondholders, sufficient to meet the shortfall identified under baseline macroeconomic assumptions in its Asset Quality Review, the Frankfurt-based supervisor said Saturday. The state-owned Hellenic Financial Stability Fund is ready to inject the 10 billion euros identified in the ECB’s adverse scenario, offering 25 percent through common shares with full voting rights in the lenders, and the rest via contingent convertible securities, according to a government statement released late on Sunday night, in Athens.