Banking sources’ converging estimates are pointing to the local credit sector’s capital needs – according to the recent stress tests by BlackRock – amounting to about 2.5 billion euros for Eurobank, some 2 billion for National Bank and less than 500 million for Piraeus. Alpha Bank is seen as the only systemic lender that will not require any additional capital.
These conclusions of course depend on an agreement being reached between the Bank of Greece and the representatives of Greece’s creditors on certain technical aspects of the exercise, which could lead to significant changes in the final outcome.
Bank sources estimate that the settlement of the issues pending with the creditors will only bring minor hikes or cuts to the sum of 5 billion euros required. However, Kathimerini has been told that the above sum of capital requirements is based mainly on the basic scenario of the exercise, which provides for the economy’s return to growth this year, and not on the alternative negative scenario.
If the creditors insist on a more conservative approach – that is to place more weight on the negative scenario that provides for the recession to extend into 2014 and 2015 – then the capital needs could end up being considerably higher.
Bank officials do not consider such a prospect likely, given that developments in the economy suggest Greece has entered a course of growth, so the negative scenario appears particularly unlikely.
Bank of Greece officials will meet with the representatives of the country’s creditors early next week and, after reaching an agreement, will inform banks and the Hellenic Financial Stability Fund of their conclusions. The country’s central bank is planning to publish the final report on lenders’ capital requirements in the first week of March.
Eurobank and Alpha sources made no secret of their satisfaction with the expected results, with Eurobank seeing the road clearing for its share capital increase. National and Piraeus officials avoided comment on the anticipated level of capital needs, but National sources noted that whatever their size, they should be entirely manageable.