March 29, 2024

News Cymru

Two sides to every headline

National Bank Greece Asks For Taxpayers For Financing

The National Bank of Greece needs to take 1.3billion Euros from the “state support fund”, presumably to stay afloat.

NBG last month said it had lost 1.346 billion euros ($1.8 billion) in the first nine months of the year after factoring in a write-down on its Greek government bond holdings.

So instead of taking the losses the bank is asking the Greek tax payer for the money instead.

A very sweet deal if you can get it.

If you lose money you just ask the government to take money from the population and give it to your business.

Given that the banks work in apparent collusion it is hard to imagine how they can be in such trouble

Unlike any other business, when a bank loans money to a customer the balance sheet of the bank increases in direct proportion to the loan made.

There is no obvious reason why the banks cannot start lending money and create the money they need.

Unless of course the liabilities of the bank are a factor larger than the amount of money that they can lend into existence.

From Reuters

Greek bank NBG says to tap 1-bn-euro from state fund
Athenians pass in front of Greece's National Bank headquarters in 2006. Greece's top bank NBG said it was seeking one billion euros ($1.3 billion) in state liquidity support and would issue the equivalent amount of preferred shares in return.

Athenians pass in front of Greece’s National Bank headquarters in 2006. Greece’s top bank NBG said it was seeking one billion euros ($1.3 billion) in state liquidity support and would issue the equivalent amount of preferred shares in return.

AFP – Greece’s top bank NBG on Tuesday said it was seeking one billion euros ($1.3 billion) from a state support fund and would issue the equivalent amount of preferred shares in return.

A bank spokesman explained that the funds would be drawn from a state support package set up in 2008 which is only open to banks until the end of the year.

“A general board meeting has been called for December 22 with the aim of drawing the remaining funds which the bank is entitled to, under the preferred shares programme,” the spokesman said.

“NBG in 2009 had estimated that it did not require funds and had only drawn 350 million from the package,” he added.

“The economic situation has now led us to request equal treatment as other banks have,” the spokesman told AFP.

NBG last month said it had lost 1.346 billion euros ($1.8 billion) in the first nine months of the year after factoring in a write-down on its Greek government bond holdings.

In particular, it had set aside 1.339 billion euros after tax in anticipation of state bond losses that are part of a bond swap programme included in an October eurozone bailout package for the country.

The move will boost NBG’s core capital to 11 percent from 9.5 percent currently, the bank spokesman said.

The Greek government is in talks with private debt holders with the aim of securing a 50-percent write-down on its maturing obligations, meaning the banks have to take substantial losses on their holdings of government bonds.

The recent eurozone accord also sets aside 30 billion euros to help the Greek banks cope with the resulting losses on their bond holdings.

Leading Greek lenders Eurobank and Alpha Bank, which are merging later this year, have also announced heavy losses brought about by write-downs on their Greek government bond holdings.

Finance Minister Evangelos Venizelos has said that Greek banks needed at least 40 billion euros to keep them afloat.

Alpha and Eurobank had respectively drawn 950 and 970 million euros from the 2008 package which was worth around 5.3 billion euros overall, the NBG spokesman said.

In contrast to common bank shares, the terms of preferred shares can be varied to limit voting rights or the total stake they represent.

 

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