Greek bank stocks dropped ten per cent amid fears that the Greek debt buyback plan will further erode their diminishing capital base.
The stocks fell despite a decision by the EU/IMF to cut the country’s debt and release urgently needed funds to keep the Greek economy above water.
Theodore Krintas, managing director of Attica Wealth Management is optimistic: “This will get us out of the crisis probably within the next six months. So it is very important for the banking system to remain on track so that international money and capital markets will open again for the Greece and the institutions as well.”
Part of deal is to buy back debt held by private sector bond holders at a reduced price of 35 cents on the euro.
The lower price, however, has upset market expectations.
Greek banks own around 15 billion euros of the country’s debt sparking fears that the banks may need further funding during their planned recapitalisation.