Reuters
June 5, 2011
The Bank of Greece, the country's central bank, plans to ask banks to boost their capital adequacy ratio to ease market fears over the impact of a haircut on Greek government bonds they hold, a Greek newspaper said on Sunday.
Battered by the country's debt crisis, Greek lenders have lost access to interbank funding and became dependent on the European Central Bank (ECB) for liquidity. Central bank authorities want to gradually wean them off this facility.
"The head of the Bank of Greece, after the results of stress tests at the end of June will ask banks to strengthen their Core Tier 1 ratios," Kathimerini newspaper said, citing banking sources.
The minimum ratio of Core Tier 1 equity and reserves capital to risk-weighted assets the central bank will require will depend on the haircut assumption it will make as regards bank's holdings of Greek government bonds.
"This does not mean that the Bank of Greece accepts there will be a haircut. On the contrary, as a member of the European Central Bank it is against any type of debt restructuring," Kathimerini said.
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