Greece’s top banks posted historic losses for last year on Friday, hit by a bond swap last month that blew holes in their balance sheets and nearly wiped out their capital base.
National, Alpha, Eurobank and Piraeus posted an aggregate loss of 28.2 billion euros (US$37.3 billion), about 10 times their current market worth, or 13 percent of the country’s GDP.
The banks treated losses from last month’s bond swap to cut the country’s debts — part of a rescue package for Greece negotiated with the EU and the IMF— as if they took place last year.
Inflicting real losses of about 74 percent on bondholders, Greece’s debt swap proved a near-fatal financial torpedo for lenders, crippling the sector’s capital base.
Out of the four big banks, only Alpha spelled out clearly where this left its Core Tier 1 capital ratio. The other three reported where capital ratios would land after their use of standby funds provided by the Hellenic Financial Stability Fund (HFSF), a capital backstop.
“The banks that did not disclose clearly their Core Tier 1 are in a negative position. They are covering this by announcing Tier 1 after including support they will get from the HFSF fund,” Akis Amanis at Beta Securities said.
Alpha’s core capital ratio (Tier 1) fell to 3 percent. Eurobank, Greece’s second biggest, did not disclose the figure, but said the hit left it with total equity of 875 million euros.
National Bank, the country’s biggest lender, with operations in Turkey, said its Core Tier 1 ratio would reach 6.3 percent, taking into account the use of a 6.9 billion euro standby facility provided by the HFSF fund.
Piraeus gave no Tier 1 figure, but said tapping up to 5 billion euros of HFSF funds would boost its total capital adequacy ratio to 9.7 percent.
Greek bank shares have shed 74 percent in the last 12 months, underperforming the Greek stock market, which is down 50 percent.
“The results, so far, are close to what the market had expected, particularly for Alpha, less for Eurobank, which was somewhat below expectations,” Beta Securities analyst Manos Hatzidakis said.
Battered by a shrinking deposit base, rising loan impairments and unable to access wholesale funding markets, banks will need to fill the resulting capital shortfall and meet capital adequacy targets set by the central bank.
They face a core Tier 1 target of 9 percent by the end of September.
On this front, they have acted to boost their core capital, including by issuing preferred shares to the government, buying back hybrid securities and selling foreign subsidiaries.
Athens, which was due to announce a framework to recapitalize banks on Friday, is still working on technical aspects with EU and IMF officials, meaning the structure of the plan will likely be unveiled after Greece’s May 6 national election.
About 50 billion euros have been earmarked in Greece’s second bailout to prop up the banking sector.
The state wants private investors to dig into their pockets for at least 10 percent of capital needs to support banks and avoid nationalizing them.
The bulk of the recapitalization will be supplied by the HFSF fund, which got a tranche of 25 billion euros in the form of European Financial Stability Facility floating rate notes on Thursday. It has been cleared to provide letters of commitment to banks that it will underwrite their capital needs.
With the economy mired in recession and unemployment at a record 21.8 percent, asset quality deteriorated, meaning banks’ non-performing loans rose further — by 130 basis points to 12.9 percent of Alpha’s loan book.
Eurobank’s bad debt provisions rose 4.7 percent last year.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is