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Bank of Greece chief: Deposits in Greece secure

Bank deposits in Greece are secure, central Bank of Greece (BoG) governor George Provopoulos assured early Tuesday, speaking on a late night programme on state NET television.

"In no instance will the solution (of a haircut of deposits) that was selected for Cyprus be implemented in Greece," he said, adding that even in the event of shortfalls in the Greek programme, these would be made up for by a reduction in expenditures and rationalization of the public sector, and not with a haircut of deposits.

He explained that the Greek banks have already absorbed the 50 billion euros foreseen in the Memorandum for their recapitalization, and consequently their capital base has been substantially boosted. Their position was further boosted by the repatriation of deposits from abroad.
Indeed, he said, more than 19 billion euros in deposits had returned to Greece between June 2012 and mid-March.

On the timetable for the banks' recapitalization, Provopoulos said that the deadline set by the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) Troika of Greece's lenders for completion of the recapitalization process by end-April was "not realistic", and anticipated that the systemic banks will have completed the relevant procedures by end-May, adding that Greece could extend the deadline by a month.

He confirmed that the Troika has expressed reservations over the planned merger of National Bank of Greece (NBG) and Eurobank, but predicted that the merger would take place and that the relevant process will not be reversed. Provopoulos said that the word 'veto' does not describe the Troika's stance on this specific merger, explaining that whatever reservations arise from the large size the new bank (after the merger) would have, as well from the large share (approximately 40 percent) of the Greek market the new bank would have.

As for the repercussions of the crisis in Cyprus on the Greek economy, Provopoulos anticipated that there would be a further, but minor, reduction in GDP.

He said the recession in the Greek economy this year would approach 4.5 percent (against an initial forecast of 4.0-4.5 percent), explaining that the impact of the developments in Cyprus on the Greek GDP would be about 0.35 percent.

Provopoulos once again reiterated that the structural changes and restructure of the public sector need to proceed, and opposed the imposition of additional taxes, while indirectly, but clearly, favored continuation this year of the collection of the extraordinary surtax on real estate (EETHDE) via PPC electricity bills.

The central bank chief further stressed that the danger of Greece's exiting the euro has been distanced, but without this meaning that it has totally eclipsed. He also declined to predict when Greece would be able to return to the international markets.

Last Updated Tuesday, 02 April 2013
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