Greek banks to get bridge recap by next week

Greece's bank support fund will allocate 18 billion euros by next week to the country's four biggest lenders as an interim recapitalisation, its head said on Wednesday.

Huge bond swap writedowns to cut the country's debt nearly wiped out the capital base of National Bank, Alpha, Eurobank and Piraeus, all of which have Cyprus subsidiaries, which need to meet a 9% Core Tier 1 capital ratio target by September.

In late April, the government gave the go-ahead to the Hellenic Financial Stability Fund (HFSF) to provide the four lenders with 18 billion euros of notes from the European Union's EFSF rescue fund to boost their capital adequacy.

The support will be an interim solution before the terms of a recapitalisation framework for the sector are worked out.

The European Central Bank said on Wednesday it had stopped providing liquidity to some Greek banks as they have not been successfully recapitalised.

"Procedures to allocate the funds should be concluded by next week," the head of HFSF, Panagiotis Thomopoulos, told Reuters.

"The money is here but there are procedures involving many stakeholders – the EU/IMF/ECB troika, the Bank of Greece, the EFSF – that must be completed and this takes time. All sides have to be on board," he said.

Key details of the recapitalisation plan for Greece's banking sector, which could run up to 50 billion euros ($64 billion) if costs to cover deposits and other related expenses of non-viable lenders are included, remain unclear.

The framework will be finalised after a new government is elected. The Hellenic Financial Stability Fund which will inject most of the financial support is funded by the euro zone and the IMF.