Greek banks need 6.4 bln euros in extra capital, stress tests reveal

Greek banks need 6.4 bln euros in extra capital, stress tests reveal

 

By Lefteris Yallouros – Athens

The Bank of Greece the results of the stress tests that BlackRock Solutions carried out on the loan portfolios of the country’s banks.

Banks must come up with an extra 6.4 billion euros in capital to make themselves strong enough to deal with future crises, the central bank said on Thursday.

The stress test showed the needs of Greece’s lenders are estimated as follows: 2.945 billion euros for Eurobank, 2.183 billion euros for National, 567 million euros for Attica Bank, 425 million euros for Piraeus, 262 million for Alpha and 169 for Panellinia. Three other smaller banks which were also assessed require no additional funds.

Lenders now have up to mid-April to show how they would cover their shortfalls while the Hellenic Financial Stability Fund (HFSF) – which  has a buffer of 8-9 billion euros – said it is ready to supply banks with capital if needed.

Based on central bank data, the banking system’s non-performing loans hit 31.2 percent of the total loan book at the end of the third quarter amid a deep recession. Citigroup said in a report this week that bad loans Greek banks old in their portfolios would peak at 50 pct this year.

Greek bankers were quick to give some idea of plans to replenish their capital when the BoG announcement was made.

Piraeus Bank (which announced profits of 2.53 billion euros for 2013) said it will initiate a major share capital increase of 1.7 billion euros. Sources say Alpha Bank is expected to announce its own increase on Friday, likely to amount to 1 billion euros. Meanwhile, the National Bank of Greece stated it will cover its requirements without a share capital increase.

Greece’s no.3 lender, Eurobank, whose shortfall stands at 2.95 billion euros, is set to speed up its delayed privatization.

The Central Bank’s announcement is expected to remove uncertainty over the future of the Greek banking system. With the completion of the recapitalization process across the banking system, Greek lenders would have strengthened their position ahead of the European Central Bank’s review of the euro zone’s largest banks in October.