You are here

ECB will provide Greek banks with more funding: Greek central bank

Emak-ECB-161014.jpg
The ECB will throw Greek banks an extra cash lifeline if the government follows its international bailout programme, the Greek central bank said on Thursday - PHOTO: AFP

[Athens] The ECB will throw Greek banks an extra cash lifeline if the government follows its international bailout programme, the Greek central bank said on Thursday.

The decision was taken late on Wednesday by ECB bank governors in Frankfurt after the Athens stock market plunged more than 5.0 per cent two days in running and yields on Greek bonds shot up as investors worried about the government terminating the bailout plan.

The ECB has decided to reduce the markdown on the value of assets which Greek banks have to put up to borrow cash.

This will have the effect of making up to an additional 12-15 billion euros available to them.

sentifi.com

Market voices on:

The Athens stock market plunged 5.7 per cent on Tuesday and 6.3 per cent on Wednesday, while the yield on its 10-year bonds jumped to 7.94 per cent. It was down 1.9 per cent on Thursday.

Analysts have said investors are concerned that Greece will not be able to stand on its own two feed if, as the government has signalled it may do, it terminate its IMF programme early.

Greece's EU aid ends in December, but under its IMF programme that lasts until 2016 there is still US$16 billion.

After four years under a rescue by the IMF, EU and European Central Bank - the so-called troika - worth about US$300 billion overall, Athens has largely repaired its finances.

The country is eager to get free from the tight budgetary and policy auditing exercised by the International Monetary Fund, European Union and European Central Bank.

Political uncertainty has also sapped market confidence.

Analysts see an early bailout exit as a move to bolster the political fortunes of the centre-right, socialist coalition government of Prime Minister Antonis Samaras.

The strict bailout conditions have led to the left-wing anti-austerity Syriza party taking the lead in opinion polls, outpacing the coalition parties together.

Political observers believe exiting the bailout would help Samaras gain the extra votes the coalition needs to ensure the election of a president next year, without which an early vote would be triggered.

French Finance Minister Michel Sapin said Thursday in Paris that" Greece still has need for help".

He said the country had made considerable progress "but you have to pay the attention to when you venture out alone on the international markets." AFP

grab

Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.

Find out more at btsub.sg/promo

Powered by GET.comGetCom