Reuters — The International Finance Corporation (IFC), a unit of the World Bank, signed a 100 million euro trade finance deal with Greek lender Eurobank on Tuesday in a bid to provide much needed credit.
The IFC, founded in 1956, last year invested about 300 million euros in Greece’s four big banks including Eurobank, taking part in their recapitalization and becoming a shareholder in all four lenders.
Its goal was to strengthen confidence and mobilize other parties to invest in Greece, helping to provide liquidity to Greek small-size businesses which form the backbone of the cash-strapped economy.
The four banks – National , Piraeus, Alpha and Eurobank – issued new shares to fill capital holes revealed in a European Central Bank stress test.
“As the prospect of positive growth has to become more visible, we remain at the forefront of initiatives to secure reasonably priced financing despite persisting liquidity constraints,” Eurobank CEO Fokion Karavias told Reuters.
Helped by a resurgent tourism sector, Greece’s battered economy grew 0.3 percent in April-to-June compared with the first quarter, creating hopes for a turnaround in the second half.
The IFC’s collaboration with Eurobank goes back five years. Similar trade finance lines with the Greek lender’s subsidiaries in the Balkans have grown to about $1.0 billion.
The IFC eyes similar arrangements with the other three Greek banks and may increase Eurobank’s credit line once it is fully utilized, a senior executive at the World Bank unit said.
“The IFC made a conscious decision to make a systemic intervention last year. We are exploring this type of transaction with all Greek banks,” Marcos Brujis, IFC Global Industry Director told Reuters.