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FACTDROP: Greek banks are going to pay for Finland's collateral demands
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2/15/2012

Greek banks are going to pay for Finland's collateral demands



The four major Greek Banks are going to lift the load of paying the collaterals' value of 800 million euros demanded by Finland. According to “Kerdos” newspaper the minister of finance Mr. Venizelos announced the decision without any prior understanding at a meeting held last Wednesday.

Finland demanded the collaterals to lift its objections and to unblock the funding process in Greece. According to the government's plan, banks depending on the amount of their assets will provide a portion which will disburse in cash. This will be deposited in an interest-bearing deposit invested in government bonds of first grade for the countries in the euro area, for 30 years. It is worth noting that the interest is paid annually, but at the end of the period. Initially the amount will be deducted from the liquidity of the banks in terms of the present value. Then it will be registered as damage to the first quarter results reducing proportionally the capital of each bank. 

This loss in not covered by the recapitalization program to be implemented in the coming months. The information indicates that Mr. Venizelos, announcing the government's decision, left no room for discussion, asking that he expects banks to do at this difficult juncture “their national duty”. He reportedly said: “If you do not close this little hole it would create a huge problem in terms of the proper development of the whole process”. The details of the whole matter discussed between banks in a teleconference held last Sunday.





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