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Greek banks need 14.4 billion euro to get on track, says ECB

Greece's battered banks need 14.4 billion euro (£10.2 billion) in fresh money to get back on their feet and resume normal business, the European Central Bank said.

The figure is the result of an ECB review of Greece's four main banks, which must now submit plans to raise the money to boost their capital buffers against losses.

That could come from investors, sacrifices by lenders or from the 86 billion euro (£61 billion) bailout from other eurozone governments.

The hole the ECB found is smaller than originally feared. The bailout provided for up to 25 billion euro (£17.8 billion) to fix the banks.

Greece is racing to bail out the banks before the end of the year, when new European rules take effect.

New European bank bailout rules take effect that would require seizing deposits over the 100,000-euro (£71,000) limit on deposit insurance. That would sting big depositors such as small and medium sized businesses, which are already having enough trouble.

The ECB found the banks - Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank - would need 4.4 billion euro (£3.1 billion) under normal expectations and 14.4 billion euro if there is a more severe downturn in the Greek economy.

Greek banks have already been bailed out under Greece's earlier bailout deals. But they suffered further losses as the country headed towards a third bailout this summer.

The number of business loans not being repaid increased as the economy deteriorated and investors fled. Depositors pulled out money fearing that Greece would be forced to leave the euro and leave them with a new currency worth much less.

The bailout deal staved off an exit from Europe's shared euro currency.

But limits on withdrawals and transfers imposed in June to prevent Greek banks from collapsing remain in place, though they have been loosened.

The review is an important step towards ending the limits.

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