ATHENS: As Greece battles a debt crisis, largest banks, including Piraeus, Alpha and Eurobank have self-issued more than €13 billion worth, of these government-guaranteed bonds.
Wounded by vanishing deposits and bad loans, Greece bank bonds are about as toxic an investment as can be found. The banks are on life support via an emergency lending program overseen by the European Central Bank, via which they have access to short-term loans from their own central bank.
But to secure this credit line, about €71 billion (more than half the deposits outstanding in Greece), these banks need to provide collateral to the Greek central bank.As was the case in Cyprus during its banking crisis, when a financial system implodes, finding acceptable collateral to swap for desperately needed loans can be difficult.
