Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Greek Banks Recapitalization Update

Here are some updates on the ongoing saga of the Greek banks. Today we hear that the Hellenic Financial Stability Fund (HFSF) will be given a shot in the arm by being capitalized with 25 billion euros of European Financial Stability Facility (EFSF) bonds:

ATHENS, Wed Apr 18, 2012 8:09am EDT - (Reuters) - Greece's bank support fund (HFSF) will receive 25 billion euros worth of European Financial Stability Facility (EFSF) bonds to be used to recapitalise the country's banks by Thursday, government officials said on Wednesday.

"The bonds are expected to be in the Hellenic Financial Stability Fund's account by tomorrow," an official who did not want to be named told Reuters. The Hellenic Financial Stability Fund (HFSF) will inject capital into the country's banks to help restore their capital base after bond swap writedowns and provisions for impaired loans.

This suggests to us that things are moving in the right direction. It is clearer now that the Greek government is not keen to nationalize the banks or they would not have announced this so close to the date 20 Apr 2012, the day banks will have to announce their results and recapitalization plans.

Somehow I am skeptical that the so called "final solution" would be announced tomorrow. Why? First of all, the price action in the shares of National Bank of Greece and its preferred shares do not suggest that a solution is near. If a solution will be out tomorrow, you can be sure that the price will reflect this solution by now.

So, more delays are to be expected and things are just going to hobble along. We're likely to have more drama and fireworks before we see anything concrete.

The elections are on 6 May. I tend to think that little will be done until elections are over.

There may be no other choice. This time round, the elections seem to be going to be a close fight. In such a situation with so much uncertainty surrounding the future government, it is unlikely that even if the Greek government announces a solution for the banks, a change in government may also derail whatever deal (if any) struck. Any solution that is put forward will likely not be confirmed until we know who will be in charge after the elections.

It increasingly seems to me that the part on telling everyone that 20 Apr 2012 is the dateline is probably to milk some money out of the EFSF as fast as possible before the guys there change their mind.

Stocks: GY