The European Central Bank (ECB), which has been providing life support to Greece’s banks, has kept its emergency funding line open.
But if Athens misses the repayment of approximately 3.5 billion euros – due to the ECB on 20 June – the Bank is widely expected to cut the 89 billion euro the Emergency Liquidity Assistance (ELA).
On top of that, billions more would now be needed for the banks to reopen.
“Greek banks have been shuttered for two weeks. They will certainly need to be recapitalised,” said Mike Ingram of BGC Partners.
“There needs to be a ‘bad bank’, how is that going to work out? And of course they are going to need continuing largesse from the ECB,” Ingram continued.
The Eurogroup of finance ministers has estimated that up to 25 billion euros will be needed to recapitalise Greece’s banks.