Pedestrians pass the headquarters of Greece’s central bank in Athens. The central bank conducted a second health check on the banks to assess whether the recapitalisation has left them capable of absorbing future shocks as bad loans keep rising.
Reuters/Athens
Greece’s four big banks are expected to need about 5bn euros ($6.9bn) in extra capital, two senior banking sources said yesterday, the bottom of a wide range of estimates of results from a second stress test by the central bank.
The estimated total, based on figures given by the Bank of Greece to each of the four banks, is subject to approval by the country’s “troika” of international lenders – European Union, International Monetary Fund and European Central Bank – overseeing its bailout.
Estimates range from 4.5bn euros to 15bn.
The central bank conducted a second health check on the banks – National Bank, Alpha Bank, Piraeus Bank and Eurobank – to assess whether last summer’s 28bn euro recapitalisation has left them capable of absorbing future shocks as bad loans keep rising.
“Each bank was told of its own capital need based on the stress test but subject to final confirmation and approval by the troika,” one banker told Reuters, declining to be named.
“The estimate for the total capital need is about 5bn euros,” the banker said, without giving any further details.
Protracted talks with the troika inspectors have delayed the outcome of the tests, which were expected early last month.
The Bank of Greece has held off releasing the results as the troika had not cleared whether the capital needs will be based on a baseline or adverse scenario that assumes two more years of recession, or whether the required capital ratio can be reduced to 8 from 9%.
Bank of Greece officials declined to comment, saying only the results would be released soon. Central bank chief George Provopoulos told parliament last month the four big banks would need extra capital but did not specify which ones.
The four banks control about 90% of the country’s banking market and are majority owned by the Hellenic Financial Stability Fund (HFSF), a bank rescue vehicle funded with 50bn euros from the country’s bailout.
“The central bank gave figures based on the two scenarios but with the disclaimer that it does not have the troika’s sign off yet,” the second banking source said. “The ballpark figure is around 5bn, based on the baseline scenario.”