Greek banks can handle capital needs in ECB test

July 21, 2014 - 3:31:53 am
A man exits a Eurobank branch as a woman (left) makes a transaction at the branch’s ATM in Athens.

ATHENS: Any capital shortfalls that the European Central Bank finds this fall at Greece’s four big banks will be manageable, the head of the country’s bank bailout fund told yesterday’s Kathimerini newspaper in an interview.

The ECB is conducting regional stress tests to review the asset valuations of the eurozone’s 128 most important lenders and assess their ability to withstand future crises. National Bank of Greece, Piraeus Bank, Eurobank Ergasias and Alpha Bank will be part of the health check.

The results of the stress test will be published in the second half of October, before the ECB takes on bank supervision on November 4.

“Even if some additional capital needs arise (in the ECB stress test), I believe they will be manageable,” Anastasia Sakellariou, chief executive of bank rescue fund HFSF, told the paper.

The four banks, which control about 90 percent of the industry, were bailed out by the European Union and International Monetary Fund, which set aside €50bn ($68bn) in bank rescue fund HFSF to clean up 

the sector after its battering in the country’s sovereign debt crisis.

The four banks have already been through two rounds of recapitalization after two stress tests by the Bank of Greece, the country’s central bank. National, Piraeus and Alpha are majority-owned by the HFSF rescue fund.

The HFSF pumped €25.5bn into the four banks and spent another €14.4bn to wind down others deemed non-viable. It has a remaining cushion of €11.5bn.

“The economic crisis gave birth to a new but stabler banking system,” Sakellariou told the paper, without forecasting how much extra capital the banks may need after the ECB’s scrutiny. Greece’s banking sector is troubled by a mountain of impaired loans after six years of deep recession and austerity policies that led to cuts in pay, record unemployment and an increased tax burden.

Non-performing loans reached €77bn, or 33.5 percent of bank loan books at the end of the first quarter, forcing banks to continue to make provisions for bad debt.

Reuters

comments powered by Disqus