Greek banks receive €18bn transfer

Financial Times
May 28, 2012

Greece’s four largest banks received a €18bn transfer on Monday as the first instalment of a recapitalisation plan agreed as part of the country’s second bailout by the EU and the International Monetary Fund.

The funding, in bonds issued by the European Financial Stability Facility, will help banks reduce their dependence on emergency liquidity assistance, a temporary lifeline provided by the Greek central bank after they were excluded from European Central Bank liquidity operations this month.

“The banks have the money as of this afternoon”, said an official at the Hellenic Financial Stability Fund, a vehicle set up by the EU and IMF to handle the recapitalisations.

The fund received €25bn from the EFSF to strengthen Greek banks more than two weeks ago but its disbursement was delayed by a legal dispute between the government and lenders over future control of the sector. The remaining €7bn would serve as a capital buffer, a fund official said.

The four banks are now expected to regain access to the ECB’s liquidity operations, using the bonds as collateral for funding at cheaper rates than under the emergency liquidity arrangement.

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