Greek bank shares hit by external factors, central bank chief says

A drop in Greek bank shares was caused by external factors, not the health of the country's banks, the governor of the Bank of Greece said on Wednesday.

Greek banking stocks have lost more than 40 percent so far this year, and the selling pressure grew in recent days. Analysts blamed the European Union's conflict with Italy over its proposed budget.

"The recent stock market developments in respect to the banking sector are not related to the soundness of Greek banks and are due to purely exogenous factors," Yannis Stournaras, the head of the Greek central bank, said in a statement.

Those factors include rising interest rates generally and in Greece's neighboring countries in particular.

"The ongoing improvement of the liquidity situation of Greek banks reflects the improved condition of the Greek financial system," Stournaras said.

On Wednesday,...