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Greece’s four largest banks received a €18bn transfer on Monday as the first instalment of a recapitalisation plan agreed as part of the country’s second bailout by the EU and the International Monetary Fund.
The funding, in bonds issued by the European Financial Stability Facility, will help banks reduce their dependence on emergency liquidity assistance, a temporary lifeline provided by the Greek central bank after they were excluded from European Central Bank liquidity operations this month.
“The banks have the money as of this afternoon”, said an official at the Hellenic Financial Stability Fund, a vehicle set up by the EU and IMF to handle the recapitalisations.
The fund received €25bn from the EFSF to strengthen Greek banks more than two weeks ago but its disbursement was delayed by a legal dispute between the government and lenders over future control of the sector. The remaining €7bn would serve as a capital buffer, a fund official said.
The four banks are now expected to regain access to the ECB’s liquidity operations, using the bonds as collateral for funding at cheaper rates than under the emergency liquidity arrangement.
Bankers said they hoped the funding would help stem a continuing outflow of deposits since an inconclusive general election on May 6 triggered fears that Greece would soon be forced to leave the eurozone.
“We now have a strong liquidity buffer that we hope will boost confidence in the sector, even though the political situation is not yet resolved” one banker said.
Another banker said the outcome of a second election on June 17 would determine “whether we can rely on the ECB for liquidity support over the medium-term.”
National Bank of Greece, the country’s biggest lender, received €7.3bn of funding followed by Piraeus Bank with €4.7bn. Eurobank EFG took €3.97bn and Alpha Bank €1.9bn, according to the HFSF.