European Central Bank

ECB's Draghi urges Greece to stick to bailout plan: Paper

European Central Bank president Mario Draghi waits for questions during a news conference at the ECB headquarters in Frankfurt, Germany, September 3, 2015
Ralph Orlowski | Reuters

European Central Bank Governor Mario Draghi urged Greece on Saturday to stick to its latest bailout to pave the way for bank recapitalisation and talks on debt relief.

In an interview with Sunday's edition of Kathimerini newspaper, Draghi said the second tranche of funds set aside for Greek banks' recapitalisation, worth 15 billion euros, would be disbursed after the first review by lenders and no later than Nov. 15.

Greek Prime Minister Alexis Tsipras has said he hopes the first review, expected to begin at the end of the month, will be completed by mid-November.

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Greece's EU/IMF lenders have said the country's top four banks will need between 10-25 billion euros ($11-$28 bln) to shore up their capital base. Private sector participation in the recapitalisation was "desirable" to minimise the use of public money, Draghi told Kathimerini.

"Private investors will certainly be more willing to commit funds to the Greek banking sector if they can be assured of successful programme implementation," Draghi said.

"Rapid progress towards the conclusion of the first review will contribute to this and is therefore in everyone's interest."

Greek banks have been battered during the country's economic crisis. To remain sustainable in the longer-term, they would have to tackle high levels of bad loans, Draghi said. Other conditions include lifting capital controls, which Greece imposed in June to avert a bank run, and renewed access to foreign markets.

"We are talking about a series of positive steps, including structural reforms, which are required for Greece to resume a path of sustainable growth," Draghi said.

He said there would have to be an element of debt relief - the European Commission forecast in May that Greek debt would reach more than 180 percent of its gross domestic product this year - but the government had to implement promised reformed.

"Ownership (of the bailout) and compliance will give credibility to debt relief, especially given the economic developments of the last 10 to 12 months," he said.