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Tue, Sep 21, 2010 - Page 10 News List

IMF-EU delay Greek bank tests: ‘Financial Times’

AFP , PARIS

A stress test on the health of the banking system in debt-stricken Greece has been postponed to allow the authorities more time to prepare, the Financial Times reported yesterday.

The newspaper said the IMF, European Commission and European Central Bank agreed with Greece’s central bank to delay testing the solvency of the bank sector by one month to the end of next month. In May, the three put together a 110 billion euro (US$140 billion) rescue package for Athens to save it from default, with the government in turn adopting draconian austerity measures to repair its strained public finances.

The Financial Times said the delay in the test means that the banks’ nine-month results can be assessed, along with a cash call next month of 1.7 billion euros by National Bank of Greece (NBG), the country’s largest lender.

The report quoted an unnamed senior Greek banker as saying that “a successful offering by NBG would boost investor confidence ... It would also accelerate mergers and acquisitions already under discussion.”

Greece offers 300 million euros of three-month bills today, after selling more than 1 billion euros last week, as the government tests how far it has gone in restoring its credibility on the markets after the country’s near collapse in May.

While Greece has been able to raise money from the markets, it has also had to pay very high rates of return to get it and the key issue will be whether it can reduce its borrowing costs.

The EU carried out stress tests on 91 major EU banks in July, with most judged to have passed despite some criticism that the testing was not rigorous enough.

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