Greece lifts capital controls on stock market

ATHENS - Agence France-Presse

REUTERS photo

Greece's finance ministry on Dec. 8 said it had lifted capital controls imposed in June on its stock market, but kept in place a short selling ban on the shares of its top banks.

"Limitations on transactions on Greek capital markets are lifted," said a decree published in the government gazette late Dec. 7.
 
Under the ban, the stock exchange operated normally for foreign investors, but local traders were unable to finance the purchase of securities by taking money from their bank accounts in Greece.    

However, the Greek capital market commmission said it was maintaining until December 21 a restriction on the short-selling of shares in the country's top five banks.
 
"The decision was reached, taking into account...the fact that the recapitalisation process of the Greek credit institutions is currently in progress," the commission said.
 
Short-selling occurs when investors sell shares they do not own in anticipation of a fall in their price, hoping to make a profit in the process.
 
This can fuel market volatility.
 
The capital controls were imposed in June when fears of Greece being ejected from the eurozone caused a run on bank deposits.
 
Greece later agreed to a new, 86-billion-euro ($91-billion) bailout with international creditors and in early September the short-selling ban was lifted for equity derivatives.
 
Under the prodding of the European Central Bank, the nation's top banks launched at the beginning of November a drive to raise fresh capital, to make up for lost deposits and the burden of non-performing loans.
 
Two of those lenders, Eurobank and Alpha Bank, raised enough private funds to forego bailout money altogether, while Piraeus Bank and National Bank of Greece still required a capital boost.