Athens Digest 09.10.2018

• Fitch: Bank scheme for bad loans could cloud key target

• Prosecutor to probe migrant funds

• Plans for mandatory electronic payments extension

# The ratings agency Fitch has warned that state guarantees for a plan to create off-load banks and deal with high levels of non-performing loans could pose risks for Greece’s deficit targets. The agency said the scheme would “go some way to stem the sell-off in Greek bank shares,” but added that public guarantees could also have negative consequences. “Such a situation would shift risks from the Greek banking sector to the Greek government,” Fitch said in a report, issued as banks came under pressure for a second week on the Athens Stock Exchange. Fitch did however upgrade Greek banks: Alpha Bank and National Bank of Greece to CCC+ and Eurobank and Piraeus Bank to CCC, all from RD (restricted default) _ a response to the lifting of most capital controls.

# Greece’s top prosecutor’s office has ordered a preliminary investigation into the state spending of funds allocated for the refugee crisis. Financial Prosecutor Mariana Psaroudaki was placed in charge of the probe and has reportedly already called witnesses to give testimony. The action was ordered as the EU fraud agency OLAF is also investigating the possible mismanagement of catering funds for refugees and migrants _ concentrating on a EUR 52 million grant given to the Defence Ministry.

# The government is reportedly developing plans to extend the mandatory availability of card-payment terminals as it considers expanding taxpayers’ requirements to make electronic payments. The expansion would likely increase terminal use for services including the leisure and catering industries, as consumers become increasingly accustomed to cash alternatives. Although Greeks still prefer cash relative to other eurozone country residents, the use of credit and debit cards has soared since capital controls were imposed in 2015.

On our Radar: Moscow visit back on for Tsipras
The Russian government says preparations are being made for a winter visit to Moscow by Prime Minister Tsipras, despite persisting bilateral tension over FYROM’s bid to see through the proposed name-change agreement and join NATO. Dmitry Peskov, press secretary for Russian President Vladimir Putin, confirmed the visit is being prepared, and the Russian news agency TASS reported that the trip was likely to take place in mid-December. Bilateral relations suffered a setback in July, when Greece expelled two Russian diplomats in response to allegations that Moscow was meddling in local protest campaigns against the name-change compromise.