Stress test issue delay making banks nervous

By Yiannis Papadoyiannis

The publication of the credit sector’s stress test results is being put off from one week to the next and holding local banks to ransom.

Lenders’ capital requirements, which depend on the findings of BlackRock Solutions’ exercise performed on loan portfolios, were supposed to be announced by the Bank of Greece by the end of December. The issue date was then postponed until early January, then to end-January and now to early February.

This delay is also pushing back the creation of the new legislative framework for the systemic banks’ share capital increases. Eurobank is the first victim of that delay, as its capital increase announced in November and destined for completion last month will now have to be done by March, when, according to Greece’s bailout agreement, the state must sell a significant stake in the lender to private investors. Bank stocks are also fluctuating wildly on the market’s uncertainty about the tests’ outcome.

Bank officials attribute the delay to the reaction of Greece’s creditors to the capital requirements the test showed, with the lenders insisting they should be greater. The same sources add that the creditors are against the government tapping the unused funds set aside for the sector’s recapitalization, close to 10 billion euros, for fiscal purposes.