As Greece’s newly elected leftist Premier Alexis Tsipras tried to strike a balanced note on Wednesday addressing his Ministers for the first time, a torrent of statements made by them signalling an overhaul of policies imposed under Greece’s bailout programme, forced Deputy Prime Minister Yiannis Dragasakis (pictured), following the negative reaction of financial markets, to make reassuring statements to investors.
Even though Mr. Tsipras stated that Greece wouldn’t default on its debts as he presided over his first cabinet meeting yesterday, and that he would negotiate with the country’s lenders over the 240 billion euro bailout without any “catastrophic” clashes, a barrage of statements made by newly appointed members of his government pledging, among other things, to increase the minimum wage and halt the sale of state assets generated a selloff in Athens’ stock exchange with the index falling by 8%.
Spreads on 10-year bonds climbed to 10.175 and three-year bonds went over 17%. Bank bonds lost over 30% in just a week with four banks losing 2.17 bln worth of capital share within a day dropping from 14.1 bln euros to 11.9 bln euros from the 34 bln euros they stood at last summer.
In an obvious attempt to calm the markets Greece’s Deputy Prime Minister intervened, following a meeting with Mr Tsipras, attributing the Ministers comments to lack of governmental experience.
“We have new ministers who are assuming such duties for the first time, and a society where a dynamic of such expectations has been created,” Mr Dragassakis said late Wednesday. “The Greek government is interested in attracting investors,” he added.
As a result the shares of the country’s systemic banks bounced back on Thursday.
Alpha Bank A.E. shares rose 18.1% , after losses of 30% on Wednesday. National Bank of Greece stocks also rose 12.3%.