Centralbanker sees year of mergers for Greek banks

Greek central bank governor George Provopoulos said on Thursday he expects consolidation moves in the country's banking sector to take place this year as banks seek alliances to deal with the debt crisis.
The government and the central bank have called on lenders to explore tie-ups and form stronger entities to better cope with the country's debt crisis and reduce their dependence on European Central Bank funding.
"(Greek) banks are in a difficult phase because of the fiscal crisis. 2011 will be a year of restructuring, mergers and cooperation," the Bank of Greece head told reporters at a meeting with President Karolos Papoulias.
"I believe that because of current conditions it will not be long before (mergers happen)," he said.
Greek banks' funding at the ECB has reached 95 bln euros or about 19% of the system's assets.
Citing pressures on liquidity, asset quality and their exposure to Greek government debt, Moody's downgraded the credit rating of six Greek lenders on Wednesday. A week earlier, it had downgraded three Cypriot banks – Bank of Cyprus, Marfin Popular Bank and Hellenic Bank – due to their extensive exposure to the Greek market.
Provopoulos, also an ECB Governing Council member, said he was neither optimistic or pessimistic on the outcome of a euro zone summit on Friday to agree on further steps to contain the region's debt crisis.
"We must not expect too much or too little. The economy's problems must be solved in Athens, not in Brussels," he said.