The Greek bond swap (PSI) of last March caused heavy losses for the banks. But no worries. EU is sending the money. Full 25 billion euro. Of course, recapitalisation of the banks is important to avoid economy collapse. Allegedly, the recapitalisation will help the banks with cash for the benefits of business and communities in order to develop and grow. The recapitalisation will complete by next September. Until then, the EU structural funds will remain in the cash registers of the EU. Greek development and growth will be on hold.
On Wednesday, president of European Commission, Jose Manuel Barroso, said “that Greece must make better use of the structural funds it is getting now from the bloc. Of the over 20 billion euros allocated for 2007-2013, less than half has been spent, it said. Another 20 billion euros of agricultural funds have been set aside for Greece for the same period.”
Greek recapitalisation fund to get 25 bln euro EFSF bonds
Greece΄s bank support fund will receive today 25 billion euros worth of bonds from the European Union to be used to recapitalise the country΄s banks. The bonds from the European Financial Stability Facility, which are meant to help Greek banks cope with heavy losses imposed in last month΄s sovereign debt swap, are part of the new 130 billion euro EU/IMF bailout for Greece.
The government has yet to finalise the terms of a recapitalisation plan due to be announced by April 20 and wants to reassure investors that adequate funds are in place at its HFSF bank support fund for capital injections later in the year.
“The bonds are expected to be in the Hellenic Financial Stability Fund΄s account by tomorrow, [today, April 20, 2012]” an official who did not want to be named told Reuters.
The recapitalisation of the banks is set to take place by September, when they need to restore their Core Tier 1 capital ratios to meet a 9 percent target set by the central bank.
Another official said Greece will receive the bonds before the banks release their 2011 results on April 20.
Greece΄s debt restructuring last month inflicted real losses of about 74 percent on the face value of its bonds, wiping out 22 billion euros of the banking system΄s 23.8 billion euro Core Tier 1 ratio, according to International Monetary Fund (IMF) estimates. Banks held 45-50 billion euros of bonds.
As HFSF΄s shareholder, the government will receive the bonds from the European Financial Stability facility and transfer them to the fund΄s account at the Bank of Greece, increasing its capital.
Last week, the government enabled the HFSF fund to issue letters of commitment that it will fund banks΄ (Capital.gr)
But how about recapitalizing the broke Greek citizens of middle, low and zero incomes? I am terribly sorry for my boldness. I almost forgot that Greeks are here just to pay…