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Stress test results for Greek banks better than expected, BoG official says

Stress test results for Greek banks better than expected, BoG official says

Stress test results for Greek banks are better than expected, a top official at the Bank of Greece said on Tuesday (27/10), four days before the European Central Bank released its official report.

The central bank official said he expected private investors to cover Greek banks' capital requirements resulting from the basic scenario of the stress test. Such a development will eliminate the possibility of a haircut on bondholders.

The recapitalization process of Greek banks will have to be completed within the first 10 days of November, the official said, adding that the results of restructuring plans submitted by Greek banks would be taken into account in estimating the final capital needs of each bank.

Earlier in the day, Bank of Greece governor Yannis Stournaras, in comments made after a meeting with visiting European Commission vice-president Valdis Dombrovskis, had underlined the need to complete a recapitalization process by the end of the year.

The Bank of Greece official said that timely completion of a bank recapitalization plan, combined with the government implementing structural reforms and a privatization program, could lift capital controls by the end of the first half of 2016. He added that it was feasible for the Greek economy to return to growth in the second half of 2016.

The central bank official underlined that a new law on resolving non-performing loans should take into account households' income criteria.