ATHENS: Shares in Greek banks plunged, dragging down the entire Greek stock market yesterday on new tensions over recapitalisation of Greek banks and delays to quarterly results.
The Greek banking sub index plummeted 13.59 percent over unresolved recapitalisation, tied to last-minute efforts to complete conditions for new debt funding to avert bankruptcy for Greece.
And the main market index was showing a fall of 5.88 percent in afternoon trading after the finance ministry said that Greek banks would not be able to swap their holdings of national debt.
The ministry also said that results for the banks for the second quarter of this year would be delayed by a month until November 30 because of delays in recapitalisation.
The ministry made its announcement shortly after a meeting between Finance Minister Yannis Stournaras and the Greek banking federation on Monday to discuss the urgent plight of the banks.
The ministry said that at the meeting, the possibility that Greek banks could swap their greatly devalued Greek bonds for bonds issued by the new European Stability Mechanism “was ruled out”.
Stock market dealers said that this caused banks share to plunge, dragging down the entire Athens stock index.
Greece hopes to help recapitalise its banks, hard hit by the national debt, deep recession and flight of capital, with money from the next instalment of rescue funds from the IMF and EU, which still hangs on completion of new reforms.
The critical matter of recapitalising the Greek banks, being kept going with various forms of funding on especially easy terms from the European Central Bank, is far behind schedule.
Recapitalisation hangs on completion of the latest audit and agreement on extra budget action and reforms between Greece and the International Monetary Fund, European Union and ECB. Without payment of the next instalment, Greece faces bankruptcy next month.
AFP
