EU okays billion-euro Greek bank restructuring

using state funds propped up by an international bailout.
The European Union’s executive arm said it judged it “apt to restore the ATE bank’s long-term viability whilst ensuring it shares the burden of its restructuring and limits the distortions of competition”.

The plan involves a Greek state recapitalisation of the bank of up to 1,14 billion euros plus liquidity measures, with the bank in return committing to reduce it its overall assets by 25 percent during the restructuring period and to improve its efficiency.

The restructuring is “a positive result of our participation in the international macro-financial assistance programme for Greece”, said EU competition commissioner Joaquin Almunia in a statement, referring to the 110 billion-euro EU and IMF bailout started last May.

The decision comes as EU partners pave the way for what they have called a “soft” restructuring of more than 330 billion euros of Greek sovereign debt, on condition that banks also agree to extend existing repayment schedules.

“The reduction in the bank’s assets will be reached mainly through sales, the run-off of certain securities portfolios and a reduction of total loan balances,” the commission said.
European partners are pushing the government in Athens to press the button on 50 billion euros of public asset sales in exchange for lessening the burden on the existing bailout, and ahead of any discussions about fresh cash loans which may or may not be required by Greece.

ATE is Greece’s fifth largest banking group, with assets totalling around 30 billion euros at the end of 2010 and a market share of approximately 6 percent of the total assets of banks in Greece, the commission said.
Greek Prime Minister George Papandreou was to chair a cabinet meeting yesterday to discuss a new plan aimed at overcoming the resurgent national debt crisis without resorting to major structural change.
The European Central Bank is still insisting that a rescheduling of sovereign debt would seriously hurt banks in Greece and in other eurozone countries. – AFP.