ECB’s Nouy: Greek banks won’t need further recapitalization

Greek lenders are adequately capitalized and will not need to raise more funds, European Central Bank (ECB) supervision chief Daniel Nouy said on Wednesday, adding however that lenders need to address bad loans and form new boards.
 “The Greek banks are well capitalised now. I would put as the first priority to address non-performing exposures and to make the new boards, the governance reforms that have been undertaken during the last 12 months, work properly. Those are the priorities,” she said during an interview with SKAI TV on Wednesday evening, adding that cooperation with the Bank of Greece has been excellent from day one. 
“We have a very, very good cooperation with the Greek supervisors,” she noted.
The ECB official said Greek banks would benefit a lot from the country’s participation in quantitative easing and the completion of the second review as it would give a strong signal for investors and would mean more confidence. 
Asked about the higher bank deposit outflows in January, Nouy said 2016 brought some good news on many fronts but in the first two months of 2017 “have been a little bit disappointing, as if there was a pause in the progress.” At the same time, she continued, hoarded cash has also been decreasing.  “So maybe it’s a temporary phenomenon – individuals and corporates paying taxes or bills – and the situation will become more normal in the coming months. I think it’s a bit early to draw conclusions on that,” she said. 
Concerning the Greek banks’ recent raise of funding from the emergency liquidity assistance (ELA) in February, she said the funding of the banks using less ELA and more deposits and investors on the market is something the ECB monitors very closely. “And again that can be temporary, we hope it is temporary.”
On the issue of government laws that have been prepared to tackle non-performing exposures (NPEs), Nouy said she hoped they will be enacted soon in order to move forward with NPEs. “The idea is to start a virtuous cycle, really. The banks that are overloaded with non-performing exposures cannot fund the economy. They put their strengths and their resources into addressing these issues,” she explained. 
Asked about the capital controls and when they might be lifted, she said she is not the competent official to respond but expressed hope they will not last long because “it’s all about confidence”.