By GABRIELE STEINHAUSER, Market Watch
BRUSSELS — The International Monetary Fund is working with national authorities in southeastern Europe on contingency plans for a Greek default, a senior fund official said — a rare public admission that regulators are preparing for the potential failure to agree on continued aid for Athens.
Greek banks are big players in some of its neighbors’ financial systems. In Bulgaria, subsidiaries of National Bank of Greece SA NBG, -3.40% ETE, -3.25% Alpha Bank SA ALPHA, -5.45% Piraeus Bank SA TPEIR, -11.11% and Eurobank Ergasias SA EUROB, -10.00% own around 22% of banking assets, roughly the same as Greek banks own in Macedonia. Greek banks are also active in Romania, Albania and Serbia.
“We are in a dialogue with all of these countries,” said Jörg Decressin, deputy director of the IMF’s Europe department. “We are talking with them about the contingency plans they have, what measures they can take.”
As part of the discussions, the IMF has asked national supervisors to ensure that subsidiaries of Greek banks have enough assets that they can exchange for emergency financing at their own central banks—in case financing from their parent institutions is suddenly cut off—and that deposit-insurance funds are at sufficient levels, Decressin said.
Negotiations between Greece and its international creditors—the other eurozone countries and the IMF—have been advancing slowly, despite warnings from Greek officials that the government is close to running out of money.
“It would be foolish for anyone in the policy world not to be worried at this stage,” Decressin said.
European officials expect no breakthroughs at a meeting of the currency union’s finance ministers on Monday. That means Greek lenders will remain under pressure, dependent on relatively expensive liquidity from the Greek central bank and at risk of bank runs in case doubts emerge over their ability to pay out deposits.
