Greek banks to get $23 billion from bailout fund

Associated Press SHARE

By MENELAOS HADJICOSTIS, Associated Press

ATHENS, Greece (AP) — Four of Greece's leading banks are to receive a €18 billion ($23 billion) capital injection to replenish reserves which 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 €18 billion will be split between the National Bank of Greece, Eurobank, Alpha Bank and Bank of Piraeus as part of a €50 billion ($64 billion) recapitalization plan to boost their liquidity levels and keep them in business — a key element of the second, €130 billion ($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 following 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 told the Associated Press the bank payments should be concluded in "next two days."

The official, who asked not to be named because the process is ongoing, said the National Bank would receive €6.9 million ($8.73 million), while others would get: Piraeus Bank €5 billion ($6.33 billion), Eurobank €4.2 billion ($5.32 billion), Alpha Bank €1.9 billion ($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 on 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.

But pharmacists across Greece staged a daylong strike Wednesday to protest what they say are debts of €540 million ($683.59 million) run up by the country's largest health care fund, which covers more than 9 million of Greece's 11-million population.

The national pharmacists' association said it was indefinitely suspending credit to the state-backed Eopyy fund, forcing its customers to pay the full cost of prescription medicine.

"Greece is running out of medication," the association warned in a statement. It said Eopyy has effectively collapsed due to lack of state funding and revenue losses as a result of a five-year recession and savage job losses.

The Athens Exchange continued its losing streak, closing down 1.79 percent at 526.39, a 22-year-low.

___

AP writer Nicholas Paphitis contributed

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.