Reuters: Regulatory News: Recapitalised Greek banks to face strict monitoring-banker

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Recapitalised Greek banks to face strict monitoring-banker Nov 16th 2012, 10:30 ATHENS | Fri Nov 16, 2012 5:30am EST ATHENS Nov 16 (Reuters) - Greek banks set to receive state aid under a recapitalisation scheme will face tighter scrutiny of their credit policies and restructuring plans, a senior banker with direct knowledge of the matter said. Monitors will be placed at each bank to oversee credit policies at the behest of the so-called troika of the European Commission, European Central Bank and International Monetary Fund lenders, said the banker, who declined to be named. "The supervision by monitoring trustees has been demanded by the troika and the EU Competition Commission," the banker told Reuters on Friday. "The monitoring trustees will not only be looking at new credit, they will also have a say on how lenders are managing their entire loan book and their follow-up on existing loans." They will also oversee any lending to top management, board members and staff, the banker said. On Monday, Athens unveiled a long-awaited framework to recapitalise its banks, whose capital base was nearly wiped out after huge losses from a sovereign debt swap and rising loan impairments because of a deep recession. Under the plan, banks will have to issue new shares to achieve at least a 6 percent core Tier 1 capital adequacy ratio and convertible bonds or so-called CoCos to boost it up to 9 percent. The private sector will have to take up at least 10 percent of the new shares to be issued to keep lenders privately run. The remainder will be taken up by a bank support fund, the Hellenic Financial Stability Fund (HFSF), that is funded from the country's bailout and has already injected 18.5 billion euros into the country's four biggest banks. The HFSF, which will provide most of the new capital by buying most of the new shares and all of the convertible bonds banks will be issuing, will become their biggest shareholder. Greece and its international lenders have earmarked 50 billion euros from the country's second, 130-billion-euro bailout to recapitalise the country's banking sector. Link this Share this Digg this Email Reprints

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