Paulson hedge funds backing recovery in Greek banks


ATHENS, Oct 7 (Reuters) - Funds run by billionaire investorJohn Paulson see Greece's recapitalised banking sector as anattractive investment play on the country's recovery after adeep six-year slump.

Encouraged by Greece's rising exports and a reboundingtourism sector, U.S. hedge fund group Paulson & Co expects theprotracted recession to bottom out this year and begin recoveryin 2014.

Paulson, whose moves are closely watched ever since heearned billions by betting against sub-prime mortgages, said ina statement: "We think Piraeus and Alpha,two banks we have a position in, are now very well capitalisedand poised to recover.

"They have good management and we think the Greek economy isimproving, which should benefit the banking sector."

Greece's bank rescue fund, the Hellenic Financial StabilityFund (HFSF), pumped 25 billion euros ($34 billion) into thecountry's top four banks - National, Piraeus, Alphaand Eurobank - to shore up their capital adequacyafter losses from a sovereign debt writedown.

The HFSF, funded with 50 billion euros from the country'sbailout, is now the majority owner of all four banks.

Greek bank stocks have lost 29 percent so farthis year, underperforming the broader Greek equities market, which has scored gains of 18 percent.

The FT reported on Sunday that Paulson and other U.S. hedgefunds, including Baupost, Eaglevale, Falcon Edge, York Capitaland Och-Ziff are investing in Greek banks, citing unnamedsources.

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