Finance Space

Greek banking stocks rebounded on Tuesday and Wednesday on renewed speculation that officials would announce support measures for Greece at Thursday’s European Union leaders summit.

Greece on Tuesday cut salaries of chief executives at state-controlled corporations as part of new tax and income measures aimed at reducing the budget deficit, which also helped the country’s banks.

Greek banking stocks were at the top of the FTSE Eurofirst 300 in early trade. EFG Eurobank jumped 9.1 per cent to €6.11, National Bank of Greece added 7.6 per cent to €14.85, while Alpha Bank advanced 6.6 per cent to €7.30.

Giada Giani at Citigroup said that although the Brussels summit would be dominated by talks on how to shore up confidence in the eurozone: “we suspect that a clear plan has not been designed yet, given the large political problems associated with it for other eurozone governments. So we think it is unlikely any detailed plan will be spelled out on Thursday – let alone any effective action taken. Supportive statements and hints at possible action plans may be the only outcomes we get from the EU summit.”

Other eurozone periphery banking stocks, which have been under pressure as investors questioned the countries’ debt positions, were also boosted following news of a potential Greek rescue.

Allied Irish Banks increased 7.8 per cent to €1.16 while Spanish BBVA added 4.6 per cent to €10.30. Millennium BCP, Portugal’s biggest listed bank, broke its downward trend since the start of the year, gaining 7 per cent to €0.79.

Other European banks reacted positively, underlining improving sentiment towards Greece and other heavily indebted countries in the region.

In London, Standard Chartered rose 2.4 per cent to £14.54, HSBC added 665p and Royal Bank of Scotland advanced 3.9 per cent to 33.17p.

BNP Paribas in France added 3.7 per cent to €50.09, while Société Générale rose 4.6 per cent to €41.43. Credit Suisse advanced 3.9 per cent to Sfr 46.30 and Deutsche Bank gained 3.7 per cent to €45.96.