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Facing cash crunch, Greece to tap into bank rescue fund

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To help ease the looming crisis, the government plans to take 555 million euros sitting at the Hellenic Financial Stability Fund (HFSF) — the bank rescue vehicle that was used in 2012 to recapitalise its main lenders.

Greece’s four top banks — National, Piraeus, Eurobank and Piraeus — handed over this money in commissions following their recapitalization.

Read More‘Wasting time’: War of words over Greece heats up

“This is money for which there is no other claim, it is available for the government,” a senior banker with direct knowledge of the matter told Reuters, declining to be named.

“The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue,” the banker added, referring to the euro zone rescue fund. He said it was up to the government to decide when it withdraws the cash.

The HFSF, funded from the country’s EU/IMF bailout with 50 billion euros, recapitalized lenders with European Financial Stability Facility (EFSF) bonds, which banks can still use as collateral for direct funding from the European Central Bank.

Greece has been also looking to tap into the cash reserves of pension funds and public sector entities through repo transactions to cover part of its funding needs in March.

In such transactions, pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters.

Greece is due to resume talks with its creditors in Brussels on Wednesday, with the aim of unlocking desperately needed funding for the heavily indebted state.

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Facing cash crunch, Greece to tap into bank rescue fund

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