It’s all falling into place with the austerity measures taking their toll on the financial equity that supports the credit structure in a euro wide banking system that does not have credible deposit insurance.
By George Georgiopoulos and Harry Papachristou
Apr. 7 (Reuters) — Greek banks, hit by a series of credit rating downgrades linked to the country’s debt crisis, have asked the government for more financial support, Finance Minister George Papaconstantinou said on Wednesday.
“The banks have asked to use the remaining funds of the support plan,” he told reporters, referring to a package first agreed by the previous conservative government in 2008.
About 17 billion euros ($22.72 billion), mainly in state guarantees, remain in the 28 billion euro support scheme, launched to help Greek lenders cope with the global credit crisis.
The Central Bank of Greece said non-performing loans in the banking system rose further in the last quarter of 2009, bringing the full-year ratio to 7.7 percent.
The banks’ plea for extra help highlighted the problems facing the entire Greek economy, which is expected to contract by at least 2 percent this year, partly as a result of austerity measures imposed to slash a huge budget deficit.
IMF officials began talks in Athens on Wednesday on implementing the austerity plan, just as the latest market jitters over Greece’s ability to manage its debt mountain eased slightly, despite uncertainty over a euro zone rescue plan.