Poul Thomsen, Director of the European Department of the IMF, said there are “no concerns” about the stability of Greek banks and an asset quality review (AQR ) is not necessary, in an apparent shift on IMF’s previous statements.
Earlier, IMF officials have been indicating that a further recapitalization of Greece’s banks is probably necessary, with Thomsen himself calling for an injection of some 10 billion euros and an asset quality review (AQR).
In a statement at the FT Investment Management Summit in London on Thursday, 28 September 2017, Thomsen says that the IMF is satisfied that the ECB’s scheduled stress tests and the undertaking for targeted asset reviews which “will allow us to gather the information necessary”.
Full Statement by Poul Thomsen:
“On the subject of the Greek banking system, let me emphasize that we see no financial stability concerns at all in Greece. The issue is that we need to be sure that there is a strategy to deal with Greece’s exceptionally high level of nonperforming loans over the medium term.
In this regard, we had suggested to update the 2015 asset quality review (AQR) by next spring. The European Central Bank (ECB) has instead proposed bringing forward the already scheduled stress tests and undertaking targeted asset reviews, suggesting that this will allow us to gather the information necessary to assess whether the current strategy for ensuring the soundness of the banking system is adequate, without having to go through a full asset quality review (AQR).
We think that this is a constructive proposal that achieves the same broad objectives, and we are now discussing the exact modalities with our colleagues at the ECB.”