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Stress test results better than expected

Stress test results for Greek banks are better than expected, a top official at the Bank of Greece said on Tuesday, four days before the European Central Bank releases its official report.

The Greek central bank official said he expects private investors to cover Greek banks' capital requirements resulting from the basic scenario of the stress tests. Such a development would eliminate the possibility of a haircut on bond holders.

The recapitalization process for Greece's systemic banks will have to be completed within the first 10 days of November, the official said, adding that the results of restructuring plans submitted by Greek banks would be taken into account in estimating the final capital needs of each bank. Earlier in the day, Bank of Greece Gov. Yannis Stournaras, in comments made after a meeting with visiting European Commission vice-president Valdis Dombrovskis, underlined the need to complete the recapitalization process by the end of the year.

The Bank of Greece official said that a timely completion of the bank recapitalization plan, combined with the implementation of structural reforms by the government as well as a privatization program, could lift capital controls by the end of the first half of 2016. He also added that it was feasible for the Greek economy to return to growth in the second half of 2016. The central bank official underlined that a new law on dealing with the burning issue of non-performing loans should take into account households' income criteria.