Greek bank investors pressured to take hit

ATHENS (Reuters) – Greek bank shareholders are under pressure from Athens to contribute billions of euros to recapitalize the lenders so that the government can avoid taking them over.

Investors will find out by April 20 the details of the financial support package on offer from the Greek government, technocrat Prime Minister Lucas Papademos said on Thursday. Athens desperately wants to keep the banks in private hands.

The terms are likely to determine whether shareholders decide to take part. If they balk at the offer, the heavily indebted Greek state could end up owning the banks.

In a worst-case scenario, 50 billion euros ($65.6 billion) or a quarter of Greece’s gross domestic product (GDP), may be required to shore up the banking system. The money is needed because loan losses and a bond swap that saved Greece from bankruptcy hit its lenders – big buyers of Greek debt – particularly hard.

The government wants at least 10 percent of the capital to come from banks’ shareholders through rights issues, a senior banker close to the talks told Reuters.

“Main shareholders will need to make decisions, come up with 10 percent to keep the keys,” the banker said. “The total bill could reach 50 billion euros, including recapitalization and resolution which is more costly.”