UPDATE 1-Greece cbanker sees lenders passing stress tests

* Greek cenbanker expects stress tests to go smoothly

* Bank mergers necessary in mid-term Provopoulos

* Greek economy seen entering virtuous cycle in autumn

* Greek cbanker sees extra deficit cuts in second half

(Adds comments, details)

ATHENS, July 17 (BestGrowthStock) – Greece’s central bank chief
said he expected the country’s lenders to smoothly pass
European Union stress tests to be published next week.

“My feeling is that things will go smoothly for the six
Greek banks included in the sample,” George Provopoulos,
governor of the Bank of Greece (BOGr.AT: ), said in an interview
published in newspaper Imerisia on Saturday.

At the same time, Greece’s banking sector needed to
consolidate to better cope with economic crisis, Provopoulos
added.

“My view is that Greek banks must join forces to cope, from
a more advantageous position, with a more adverse macroeconomic
and financial environment in the next years,” he said in the
interview.

A bid submitted this week by Piraeus Bank (BOPr.AT: ),
Greece’s fourth-largest, to take control of state-run ATEbank
(AGBr.AT: ) and Hellenic Postbank (GPSr.AT: ) was a first step in
this direction, Provopoulos said.

“Mergers impose themselves… in the medium term,”
Provopoulos said.

Greece’s central bank chief said he was reasonably
optimistic that the debt-laden government would manage to meet
its deficit cut targets this year, helping the economy enter a
virtuous circle from September.

“On the spending and revenue side, there are legislated
measures in the order of 2.5 percent of GDP, which will yield
results in the second half of the year,” Provopoulos said.

“I can reasonably express satisfaction and optimism,” he
said. “I believe that, on the whole, things have taken their
course and a virtuous circle begins to operate which will be
much more visible from the coming autumn, as positive signs
multiply.”

Earlier this month, Greece announced that the central
government deficit shrank at an annual pace of 46 percent
between January and June, boding well for efforts to narrow its
general government gap to 8.1 percent of gross domestic product
from 13.6 percent last year.

(Reporting by Harry Papachristou, Editing by Jonathan
Thatcher)

UPDATE 1-Greece cbanker sees lenders passing stress tests