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Paulson hedge funds backing recovery in Greek banks

ATHENS, Oct 7 (Reuters) - Funds run by billionaire investor John Paulson see Greece's recapitalised banking sector as an attractive investment play on the country's recovery after a deep six-year slump.

Encouraged by Greece's rising exports and a rebounding tourism sector, U.S. hedge fund group Paulson & Co expects the protracted recession to bottom out this year and begin recovery in 2014.

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

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

Greece's bank rescue fund, the Hellenic Financial Stability Fund (HFSF), pumped 25 billion euros ($34 billion) into the country's top four banks - National, Piraeus, Alpha and Eurobank - to shore up their capital adequacy after losses from a sovereign debt writedown.

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

Greek bank stocks have lost 29 percent so far this 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. hedge funds, including Baupost, Eaglevale, Falcon Edge, York Capital and Och-Ziff are investing in Greek banks, citing unnamed sources.