ATHENS: Initial bailout funds for Greek banks will be placed in a special account not on their balance sheets and lenders will receive fresh equity only after a “stress test” is finished by the end of October, several sources told Reuters on Wednesday.
An initial 10 billion euros will be made available “immediately” to shore up confidence in the Greek banks, several sources said, while authorities conduct a detailed asset quality review, that is expected to take several months. Greek banks will also have to submit viable business plans to European authorities before fresh equity is disbursed and will only receive cash from the special account, which will be controlled by the European Stability Mechanism, once resolution authorities sign off on the plans, the sources, who asked not to be named, said.
Another 15 billion euros will be available before the end of the year, the sources said.“When the full recapitalisation of banks is fulfilled it will have a major impact for the economy,” one of the sources said. “We know that there is around 40 billion euros in cash under the mattresses in the real economy and that money could come (back to the banks) very very quickly.” Greek banks, closed for much of July, have been kept on a lifeline by the European Central Bank and limit cash withdrawals to 420 euros per week to prevent a run by clients.
