Bank recap cash can't be used for other purposes

By Yiannis Papadoyiannis

The government?s plans to utilize unused funds from the banks? recapitalization process to tackle the huge problem of bad loans have run into an obstacle in the form of the contracts the country signed with its creditors, as the use of the 10.9 billion euros at the disposal of Hellenic Financial Stability Fund is restricted by law to the strengthening of the banks? capital base.

It would require the explicit consent of the country?s creditors for the unused sum to be used for other purposes, senior bank officials say. The cash cushion has been returned to the European Financial Stability Facility (EFSF) in accordance with the Eurogroup agreement on February 20.

Although the 10.9 billion euros has left the Greek bank bailout fund and is now held by the EFSF in the form of bonds, it remains at the disposal of the HFSF for the purposes of bank recapitalization and streamlining should such a need arise again.

HFSF managing director Anastasia Sakellariou says that the bank bailout capital has been utilized in the most optimal manner possible, based on best practices for fund management.