Fitch downgrades credit ratings of five Greek banks

08:16, April 12, 2010      

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Fitch rating agency downgraded the credit ratings of five major Greek banks with a negative outlook on Saturday, a day after it downgraded the credit rating of Greece, while the Greek government weighs the prospect of asking for the activation of the EU-IMF financial support mechanism.

Fitch lowered the ratings of the National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank to BBB- from BBB and the rating of ATEBank to BB+.

On Friday, Fitch had downgraded the long-term credit rating of Greece to BBB- from BBB+ "due to continuing fiscal challenges."

In the meantime, according to Greek media reports, after the information that circulated on Friday that EU and the International Monetary Fund (IMF) officials are close to a technical deal on the terms of granting a loan to Greece as soon as Athens makes an official request, the Greek government considers asking for financial aid next week.

The official line is still that Greece can overcome the debt crisis on its own means, but according to Greek media reports, after the new developments Athens weighs the advantages and disadvantages of resorting to the IMF-EU mechanism in the following days.

Greek Prime Minister George Papandreou held a series of telephone conversations in the past few hours with the EU President Herman Van Rumpuy, the EU Commission head Jose Manuel Barosso, the European Central Bank President Jean-Claude Trichet, the Eurogroup head Jean-Claude Juncker and Spanish Premier Jose Louis Zapatero.

The talks were focused on the evaluation of the current situation of the economy in Europe, according to a statement released by the Greek Prime Minister's office, which stressed that the issue of activating the support mechanism was not raised.

But Greek media Saturday quoted government sources as saying that Greece could make an official request to receive financial help from EU partners and IMF as early as next week.

The final decision will be made when Brussels and Washington agree on a reasonable interest rate for Athens, according to the reports. According to unconfirmed information, Greece would consider using the mechanism if the rate was around 3.5 to 5 percent, but EU officials, under Germany's pressure mainly, lean towards a 6 percent interest rate.

The IMF could release in the following weeks around 10 billion euros (13.384 billion U.S. dollars) for Greece, according to Greek media reports, while the European financial aid could reach up to 44 billion euros.

According to the Greek media, Athens will probably clear its stance after the forthcoming Eurogroup meeting next Tuesday, waiting for more clarifications on the terms of the deal.



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