Politicking could bring yet another Greek election

Significance

The left-right coalition that governed in January-August has been reconstituted with a reduced parliamentary majority. It is ostensibly committed to the reform programme associated with the country's bailout, but also seeks relief from the country's massive aggregate debt in order to free resources for growth-promoting investment. Creditors insist, however, that there can be no further adjustments until the government completes 'prior actions' effecting fundamental structural changes.

Impacts

• Lenders have indicated that from first quarter 2016, performance reviews will focus on implementation, not just legislation, of reforms.
• The four main banks' asset quality is being reviewed and stress tests must be completed by mid-November, for recapitalisation by year-end.
• Legislation on non-performing loans must be settled before an EU directive takes effect in 2016 requiring bailing in uninsured depositors.