Bank results take beating from debt haircut

Eurobank and Piraeus to require over 13 billion euros between them in recapitalization

Eurobank will need 5.8 billion euros and Piraeus Bank another 7.3 billion in the context of the planned recapitalization to satisfy their capital requirements, the two banks announced on Thursday upon publishing their nine-month results.

The above amounts include all the requirements of the Bank of Greece and what the BlackRock audit into the banks’ needs showed last year.

The major blow from the private sector involvement (PSI) in the Greek debt restructuring, the great increase in provisions due to the deterioration of financial conditions and the reduction in revenues have led to an increase in losses for both lenders in the first nine months of the year.

At end-September Eurobank showed losses of 1.095 billion euros, against losses of 575 million euros in the same period last year, while Piraeus showed losses of 1.253 billion euros in the January-September period against losses of 874 in the first half of this year.

The deterioration of financial conditions due to the major uncertainty and the political instability left little room for maneuver: Eurobank’s total operating revenues were reduced by 24.7 percent, while provisions for nonperforming loans (NPLs) amounted to 1.2 billion euros, up by 23.3 percent on a yearly basis. Bad loans accounted for 21.3 percent of all loans in Eurobank’s portfolio.

Piraeus took its provisions to 1.4 billion euros, while the bank’s results were burdened further by 300 million euros due to the Greek state bonds, wiping out the profits before tax and provisions that had amounted to 513 million euros. NPLs amounted to 18 percent of all Piraeus Bank loans.

Attica Bank registered nine-month losses of 108 million euros, but retained its positive net position despite the huge provisions of 351.2 million euros, up 36.8 percent on last year. Finally, Geniki Bank showed losses of 88.8 million euros in the year to September, but operational costs declined by 10.6 percent year-on-year.

National and Alpha are set to announce their nine-month results on Friday.

Late on Thursday, international agency Standard & Poor’s announced that despite upgrading Greece’s credit rating to B- this week, it maintains the rating for the country’s biggest banks at CCC, considering that they continue to face huge challenges.