Greece’s four top banks are expected to need an extra capital injection of about 5 billion euros (US$6.9 billion), local media said on Sunday, as the country’s international lenders prepared for a new audit of Greek finances.
The Bank of Greece is currently evaluating the restructuring plans of the country’s four main lenders — National Bank, Alpha Bank, Piraeus Bank and Eurobank — before releasing stress test results that will show whether they can absorb possible future shocks from bad loans.
The Ethnos newspaper reported that the central bank’s preliminary estimates put the banks’ capital needs at about 5 billion euros, while Realnews said it would be about 4.5 euros to 4.8 billion euros.
The central bank said official results would be published by early next month.
Officials from the EU, the European Central Bank (ECB) and IMF were yesterday to begin their latest audit of Greek finances to decide whether a new tranche of aid will be released.
The so-called troika of lenders — the EU, IMF and the ECB —will also meet with Greek Finance Minister Yannis Stournaras.
Last month, Bank of Greece Governor George Provopoulos warned of rising bad loans, saying the “late repayment of loans could lead to a reduction of banks’ capital and the need for [new] capital to pay high commissions.”
The Greek banking sector underwent radical restructuring and consolidation last year under the terms of the country’s bailout deal with the EU, IMF and the ECB.
The four top banks were recapitalized as part of the terms included in the latest EU-IMF bailout deal.
A period of consolidation of the banking sector followed, with the big four rapidly acquiring smaller rivals and the subsidiaries of foreign banks who had pulled out.
A sum of 50 billion euros from the rescue loans was earmarked for the recapitalization of banks following the heavy losses they suffered by taking part in a write-down of privately-held Greek government bonds in 2012.
Meanwhile, Greece’s main opposition leader is certain a left-wing government will be in power by early next year and its top priority will be to negotiate a lightening of the country’s “unsustainable debt,” according to an interview published in a Sunday newspaper.
The present coalition government of conservatives and socialists could collapse this year if the Radical Left Coalition wins the May European election by a big margin, party leader Alexis Tsipras told To Vima.
Tsipras, the European Left’s candidate for the presidency of the European Commission, pledges to keep Greece in the eurozone and says he does not seek special treatment for Greece.
However, he added that if Greece’s eurozone partners do not agree on further cutting the country’s debt, he would stop servicing it.
The debt cutting negotiations will be the subject of an emergency EU summit that Tsipras will demand if his party forms a government.
Asked what would be his trump card in the negotiations, Tsipras said: “Europe knows Greece is the powerful energy partner of the year 2020,” referring to prospects for significant gas and oil finds in the Eastern Mediterranean, still at a stage of early exploration.