Banks in Greece to get $23B bailout

By Menelaos Hadjicostis

associated press

Published: Wednesday, May 23 2012 9:15 p.m. MDT

A man sleeps on the ground below the marble statues of ancient Greek philosopher Plato in central Athens, on Wednesday, May 23, 2012. Greece's four biggest commercial banks will receive an euro 18 billion ($23 billion) cash infusion from the European bailout fund. Greece has been caught in an acute financial crisis for two and a half years, and has only avoided bankruptcy through international rescue loans.(AP Photo/Petros Giannakouris)

Associated Press

ATHENS, Greece — Four of Greece's leading banks are to receive a $23 billion capital injection to replenish reserves that were hit by country's massive debt restructuring deal.

The country's Financial Stability Fund said Wednesday it had approved the funds' release to banks.

The $23 billion will be split between the National Bank of Greece, Eurobank, Alpha Bank and Bank of Piraeus as part of a $64 billion recapitalization plan to boost their liquidity levels and keep them in business — a key element of the second, $166 billion bailout agreement that Greece had negotiated with the European Union and the International Monetary Fund last March to stay solvent.

Greek banks suffered massive losses after a writedown of their Greek government bond holdings this year. On top of the writedowns, Greek banks have also been hit by customers withdrawing their euro-denominated savings as they hedge against the country's possible forced exit from the single currency and a return to its old devalued currency, the drachma.

An official at the stability fund said bank payments should be concluded in the "next two days."

The official, who asked not to be named because the process is ongoing, said the National Bank would receive $8.73 million, while others would get: Piraeus Bank $6.33 billion, Eurobank $5.32 billion, Alpha Bank $2.41 billion.

He denied speculation that the timing of the bank rescue was linked to the country's political stalemate.

Greece will hold a new general election June 17, after pro- and anti-bailout parties failed to hammer out a coalition deal following a May 6 poll.

The country's caretaker government has urged unions, employers and professional groups to avoid protests until a new government is formed.

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