Banks' capital needs add up to 6.4 bln euros, says BoG

By Yiannis Papadoyiannis

The additional capital requirements of Greece’s lenders total 6.382 billion euros, according to the results of the stress tests that BlackRock Solutions carried out on the loan portfolios of National, Alpha, Piraeus and Eurobank along with five smaller lenders late last year, the Bank of Greece announced on Thursday.

The needs of Greece’s lenders are estimated as follows: 2.945 billion euros for Eurobank, 2.183 billion euros for National, 567 million euros for Attica Bank, 425 million euros for Piraeus, 262 million for Alpha and 169 for Panellinia, while the three other banks (all of which are smaller than the others) will need no additional funds.

On Thursday Piraeus announced it will initiate a major share capital increase of 1.7 billion euros, while Alpha is expected to announce its own increase on Friday, likely to amount to 1 billion euros. National, on the other hand, stated it will cover its requirements without a share capital increase. Piraeus also announced profits of 2.53 billion euros for 2013.

Using the baseline scenario of the exercise and using the 8 percent capital adequacy ratio, the central bank has calculated that under normal conditions of economic uncertainty, the capital needs of banks up to December 2016 will be covered by the reserves already factored in the test, activities to reduce capital requirements (such as private sector participation in share capital increases, asset sales etc), and the unused funds of the Hellenic Financial Stability Fund.

The Bank of Greece has also asked lenders to submit their plans to strengthen their capital bases by April 15. BoG sources said that the plans should be implemented as soon as possible and that the issue is being negotiated between the government and its creditors, while banking sources said at least six months will be required.

The central bank’s much-anticipated report said that in the period from 2014 to 2016, local lenders will suffer losses of 50.24 billion euros from nonperforming loans in Greece, plus another 10 billion euros from bad loans issued abroad.