BUSINESS

PSI costs domestic lenders dearly

HFSF commits itself to participating in the recapitalization process By Yiannis Papadoyiannis

The 2011 losses of Greece?s four major commercial lenders totaled a record 28.26 billion euros as a result of their participation in the private sector involvement (PSI) program aimed at reducing the country?s debt burden.

Bank officials told Kathimerini that the losses were inevitable due to the considerable exposure that National, Eurobank EFG, Alpha and Piraeus had to state bonds.

National Bank posted losses of 12.34 billion euros last year, with the PSI program accounting for 11.78 billion of that sum. For Eurobank, the corresponding figures were 5.5 billion and 4.6 billion, while for Alpha they were 3.83 billion and 3.81 billion, with the latter?s officials stressing its relatively strong capital base. Piraeus, on the other hand, registered losses of 6.6 billion euros, with 5.9 billion of that being PSI-related.

State lender ATEbank received a 40-day extension to its deadline for announcing financial results for 2011, as the government is still in negotiations with its creditors regarding how it and Hellenic Postbank will be recapitalized.

At least the road to the recapitalization of banks is open, as the Hellenic Financial Stability Facility (HFSF) committed itself yesterday to participating in the planned share capital increases of the country?s major banks with 18 billion euros, which the Bank of Greece has deemed viable.

HFSF sent a letter to the four banks on Friday informing them it will invest 6.9 billion euros in National Bank, 4.2 billion in Eurobank, 1.9 billion in Alpha and 5 billion in Piraeus. These funds should secure a capital adequacy index of more than 8 percent, which renders them viable and secures their uninterrupted funding from the Eurosystem.

However, the crucial issue of the incentives that will determine whether or not private investors participate in this tough process will be decided after next month?s elections.

?Only when the terms of recapitalization are finalized will we be able to assess the real needs that must be covered,? bank officials told Kathimerini.

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