BoG governor on banks

   Bank of Greece’s governor George Provopoulos on Thursday predicted that there will not be a second package of financial support to Greek banks. Speaking in Parliament, during a testimony over the central bank’s monetary policy report, Provopoulos said: ?According to what we know at this moment, there is no need for a second package?.

    Commenting on Greek banks’ investments in Southeastern Europe, the central banker said it would a ?criminal mistake? for Greece to say it did not care about them and stressed that Greek banks have other ways of financing their investments abroad.

    Provopoulos said banks could use savings from one country and to transfer them to another country. ?No one can prohibit such an action,? he said, while he added that the European Central Bank and the Eurosystem was filling in for a liquidity gap created by a freezing of international capital markets.

    The central banker underlined that the country simply cannot sacrifice what it has invested over the last few years in the region, because of the current difficult situation. ?We will live with these hardships, we will survive. But we must be prudent and to reap the rewards at the end.? Provopoulos said that Greek investments in the region was more than just a financial presence.

    He stressed the consequences from a mistake to characterize Greek banks’ provisions as toxic. ?Debt provisions will grow in a worsening environment. When an economic growth slows from 4.0 pct to 0.5 pct, if not worse, this obviously means a violent worsening of conditions and of course a larger number of bad debts will surface. This is expected. But not be haste of talking about toxic because we harm Greek banks as well,? Provopoulos said, adding that ?Greek banks have an adequate, strong capital position, capable of absorbing shocks?.