BoG set to publish test results

Despite disagreement with troika, that sees needs up to 9 bln euros, the central bank will put them at 6 bln By Yiannis Papadoyiannis

The Bank of Greece intends to publish local banks’ capital requirements by this Friday despite the disagreement noted in the second meeting between Governor Giorgos Provopoulos and troika mission chiefs in Athens on Tuesday.

The chief inspectors from the European Commission, European Central Bank and the International Monetary Fund insisted in Tuesday’s meeting that the capital needs of domestic lenders amount to 8.5-9 billion euros, according to the stress tests conducted on their loan portfolios by BlackRock Solutions late last year. Provopoulos however countered that the BoG’s calculation of the banks’ needs was based on BlackRock’s findings and that the central bank had followed a conservative approach to ensure the reliability of the exercise.

Sources say that the Bank of Greece has determined the capital needs of the banking sector at around 6 billion euros. Eurobank and National will each require over 2 billion euros, while the requirements of Piraeus Bank and Alpha will be marginal. Besides the four systemic banks, the BoG report will also include the needs of Attica Bank and Panellinia.

Tuesday’s meeting also examined the time frame that banks should be given to amass the necessary funds. There was no definitive decision on that either, but banking sector sources estimate that the process will have to be concluded before November, when the results of the new Pan-European stress tests will be issued by the ECB.

Notably, the ECB has made it clear that the issue of recapitalizations is the exclusive responsibility of the national regulatory authority, which will have the final say on the matter. After all, the BoG constitutes an independent institution which is not under government control and therefore its policy cannot be the object of political negotiations between the government and the troika.

Bank officials add that the local market will not respond negatively even if the troika publishes its disagreement with the results issued by the BoG.