Greek banks, which received two capital infusions in the past two years, might need a third one as a recession drives up losses from bad loans.
The four biggest lenders, accounting for 91 percent of the country’s banking assets, could see their 12 billion euros (US$13.68 billion) of tangible core capital wiped out by mounting provisions as overdue and restructured loans default. Even if Greece reaches an agreement with European creditors to free up additional money, its next bailout would need to include a new round of funding for the ailing banks.
Bad loans rose last quarter as the economy slipped back into recession and Greeks delayed payments waiting for the new government to pardon debt. With the recovery stalled, the four banks — National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA — could require 16 billion euros in additional provisions to cover losses if half of the 59 billion euros of overdue and restructured loans on their books sour.
“We had expected nonperforming loans to peak in the first quarter, but we now expect this sometime in 2016, subject to some kind of economic stability,” Moody’s Investors Service’s Athens-based analyst Nondas Nicolaides said. “There’s a high risk that restructured loans and others showing signs of trouble will slip back into default. It’s a possibility the banks might need another round of capital injections.”
National Bank, Piraeus and Eurobank spokesmen declined to comment. A spokeswoman for Alpha did not return calls.
Even after two previous capital infusions — including a bailout by the EU and the IMF — Greek banks are thinly capitalized. More than half of their capital is made up of deferred tax assets — credits for losses that can be used to reduce taxes when the banks return to profitability. The credits only have value if the government, which is almost broke, can convert them to cash.
Global rules implemented after the 2008 financial crisis are phasing out the use of deferred tax assets as capital because they do not help absorb losses. Some European countries including Greece converted them to government guarantees of future credits. The European Central Bank is skeptical of their use and might ask banks to increase equity to lower their reliance on such capital. The 12 billion euro figure for tangible capital at the four Greek banks excludes deferred tax assets.
Analysts and investors have focused more in recent months on liquidity — how banks are funded — than on solvency. Lenders have lost more than 20 percent of their deposits since November last year according to Greek central bank data and JPMorgan Chase & Co estimates. The firms have relied on almost 120 billion euros of funding from the European Central Bank and Greece’s central bank to replace the deposits and are close to running out of collateral to pledge.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained