The bank support plan moves ahead

The recapitalization program for banks appears to be moving ahead even if we have not yet formed a government. By Monday at the latest, the State must have submitted to the relevant banks the draft agreement to share the bonds of 18 billion euros from the EFSF.

According to reports, the EFSF has formed the basic plan for direct coverage of the losses the banks suffered from the PSI and now it is their turn to submit their comments.

While the banking industry is subject to multiple pressures in the difficult times faced by our country, there is an attempt to provide initial support to banks to reinforce their capital position, sending a message to the markets that there are no nationalization plans being promoted at the moment.

After this move, initiatives will pass on to the new government that will make the political decisions on the recapitalization terms.

The course is expected to be difficult and might last until the end of the year, as there should be clarification about what will happen with the participation of individuals in the recapitalization of banks, with convertible bonds, with the bonus shares and their exchange ratio with shares.

The difficulties are exacerbated by the pre-election and post-election liquidity that discouraged private investors. The Finance ministry states that the amount which is required to raise the capital for the reinforcement of banks depends on the fluctuations in the current valuation of the assets of each one of them.

Their "inventory" includes shares and Greek bonds and if their prices drop further, it is doubtful whether the 25 billion euros that were budgeted at the signing of the memorandum II will suffice.