BUSINESS

Banks confident they could cope with a rise in bad loans

By Yiannis Papadoyiannis

Banking officials believe that the Greek credit system has more than adequate strength to withstand the ongoing economic crisis, as it could absorb an increase in nonperforming loans of up to 50 percent, according to a report by German bank Berenberg published on Thursday.

During a recent visit to Athens, the German lender’s officials met with representatives of the country’s four systemic banks, who told them that the blow from an increase in provisions could be offset by the strong capital base local lenders have following their recapitalizations, as well as the expected profits before provisions in the next three years.

The Berenberg report warns that existing bank stakeholders may be in for a devaluation of their holdings should the BlackRock Solutions stress tests show that the Greek credit sector requires an additional capital boost.

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