Greece can use bank rescue cushion to avert new bailout

Greece wants to use some 11 billion euros ($15 billion) left in its EU bank rescue package to meet upcoming needs and avoid a new bailout loan, a government source said on Wednesday. "The 11 billion euros can keep Greece from needing a third loan," a Greek finance ministry source said on the sidelines of a two-day Eurogroup meeting in Athens. "We are covered for the next 12 months. With this 11 billion we will be covered to 2016. It's simple logic," said the official, speaking on condition of anonymity. A sum of 50 billion euros from Greece's EU rescue loans was earmarked in 2012 for the recapitalisation of Greek banks after they suffered heavy losses due to the write-down on government bonds as part of the bailout programme. Of that total, some 39 billion euros was eventually employed to recapitalise Greek banks last year. "It is an important sum. Better that it remain as a safety cushion," the official said, adding that the money can "either be directed to repay debt, or to the financing gap in 2015-2016." Speaking on Tuesday, Eurogroup chief Jeroen Dijsselbloem refused to comment on whether Greece, which intends to start borrowing on markets again later this year, might yet need another rescue loan. "Let's concentrate on the programme that still runs to the end of the year," he said. "Later this year, at the earliest in the summer, we will come back to the question of what happens after this programme," the head of the eurozone finance ministers said. Greece had until recently targeted its return to borrowing on financial markets for the second half of the year with a sale of five-year bonds to raise 1.5-2.0 billion euros ($2-3 billion). However, on Tuesday Finance Minister Yannis Stournaras said "a small issuance of bonds, 3-5 year bonds" would actually take place in the first half of the year. Since being rescued by the International Monetary Fund and European Union in 2010, Greece has been able to issue only short-term bonds. The country has been rescued with two loans totalling 240 billion euros ($331 billion) to finance its bond repayments its annual running costs. On Tuesday, the Eurogroup cleared the way for the release of a pending instalment of loans totalling 8.3 billion euros for Greece, of which 6.3 billion euros would be made available by the end of April.