ATHENS, Nov 9 (Reuters) - The funds earmarked to recapitalise Greece's viable banks will be adequate as long as an economic downturn does not worsen more than current government projections, the head of the country's bank support fund said on Friday.
Huge losses from a sovereign debt swap in March and rising loan impairments nearly wiped out the capital of Greece's systemically important banks. Authorities plan to use 50 billion euros from the country's international bailout to shore up the sector.
"The 50 billion euros will suffice provided the recession is not bigger than the forecast 4.5 percent contraction in 2013," Panagiotis Thomopoulos, head of the Hellenic Financial Stability Fund (HFSF) told an Economist conference on risk management.
Recapitalising Greece's limping banks is a vital part of the 130-billion-euro bailout given to it by the EU and International Monetary Fund bailout to right the economy and avert a sovereign bankruptcy.
The HFSF has already injected 18 billion euros into the country's four largest banks, National Bank, Alpha Bank, Eurobank and Piraeus Bank.
It is now awaiting Greece's next aid tranche, worth 31.5 billion euros, to replenish its cash arsenal.
Greece expects its economy to stay in recession for a sixth straight year in 2013 and the troika of the European Commission, IMF and European Central Bank are still examining its current efforts to start to put a cap on its debts.
"2013 will be a difficult year but the banking system will weather it. The troika knows that without a functioning banking system Greece will not be able to recover," Thomopoulos said.
Under the bank recapitalisation framework Athens is finalising, banks will have to meet a 9 percent Core Tier 1 capital adequacy ratio.
Lenders will have to issue shares to meet more than half of the 9 percent capital adequacy requirement and convertible bonds for the rest. Shareholders will have to take up at least 10 percent of the new shares for banks to be kept privately run.