Greece’s banks will require around 14 billion euros in fresh capital just to keep them running in the event of a deal with European creditors, according to estimates by a senior banking official. The country’s banks have been shut for over two weeks now and they have been depending on ECB-approved emergency credit line from the domestic central bank to dispense rationed cash. However, the official is hopeful the branches would be opened next week. National Bank, Piraeus, Eurobank and Alpha, which account for about 95% of the banking activity in the country, will need to be recapitalized after an assessment by regulators and are not likely to return to a semblance of normalcy for months, he added. Greece is expected to raise the money from private investors, but if it proves futile, banks may get a capital injection from the European Support Mechanism’s Direct Recapitalization Instrument (DRI), a new facility which has so far been unused. It is not clear yet what conditions would be imposed by the mechanism in return for such capital, although it is expected to involve a commitment to major restructuring of the Greek financial sector.
