Date
24 July 2017
Eurobank, one of Greece's four biggest banks, may be forced to merge with one of its rivals. Photo: AFP
Eurobank, one of Greece's four biggest banks, may be forced to merge with one of its rivals. Photo: AFP

Greek banks face closures, bailout or not

Some large Greek banks may have to be shut and taken over by stronger rivals as part of a restructuring of the sector that would follow any bailout of the country, Reuters reported, citing European officials.

European leaders will gather on Sunday in a last-ditch attempt to salvage agreement with Greece after months of acrimonious negotiations that have taken the country to the brink of leaving the eurozone.

But regardless of whether or not fresh funds are now unlocked for the government, some Greek banks, damaged by political and economic havoc, may have to be closed and merged with stronger rivals, officials, who asked not to be named, told the news agency.

One official said Greece’s four big banks could be reduced to just two, a measure that would doubtless encounter fierce resistance in Athens.

A second person said that although mergers of banks were necessary, this could happen over the longer term.

After Athens defaulted on debt owed to the International Monetary Fund last month, the European Central Bank froze emergency funding for Greek banks, leading to their temporary closure and a 60 euro (US$66.40) daily limit on withdrawals from cash machines.

A decision by Greek voters last week to reject bailout terms offered by the country’s international creditors prompted the ECB to maintain its cap, meaning that the banks will run out of cash soon.

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