BEIJING (MNI) – Key stress tests of struggling Greek banks have
been postponed until international regulators see the results of the
on-going attempts by the nation’s banks to sell their debt in
international markets, the Financial Times reported Monday.
The International Monetary Fund, the European Commission and the
European Central Bank agreed last week to postpone the tests by one
month to the end of October, the FT said.
The National Bank of Greece, the nation’s largest lender, is due to
auction three-month paper on Tuesday and the results are seen a key test
of international investor appetite for Greek bank debt.
The Greek government borrowed more than Eur1 billion from the
market last Tuesday, its first debt issue in two months. Encouragingly,
about one-third of the buyers were international investors rather than
local banks, in contrast to recent experience of very little
international investor demand.
The move to delay the Greek bank stress tests comes amid continued
skepticism about the results of the recent stress testing of 91 large
European banks, which showed only a handful with inadequate capital.
Moreover, a Wall Street Journal investigation published two weeks ago
reported that many banks did not fully report their problem assets
during the tests.
Bond yields among the peripheral Eurozone countries remain high and
investor confidence fragile. A critical report last week by one of the
UK’s leading bank about the outlook for Irish banks caused a sharp drop
in investor confidence, forcing the ECB to step in to help Irish
institutions.
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