Banks reject stress test concerns

Sector's denial of any capital injection needs receives backing from positive report delivered by JPMorgan

Greek banking sources are denying reports that the sector will need a new round of increased capital support, announcing that no such news has been delivered to them by the European Central Bank.

The reports on the issue have emerged ahead of a new round of stress tests to be conducted on all European Union banks this coming October.

As reported Wednesday by Kathimerini, the recent fluctuations observed in bank share price levels and the concern being expressed over the results of the EU-wide stress tests to be carried out by the ECB have prompted financial authorities to take action.

Responding to a request by the Greek Capital Market Commission for comments on the issue, the administrations of Greece’s four main banks, National, Piraeus, Alpha and Eurobank, all denied receiving any warnings from the ECB, while also stating that the reports being floated around were unrealistic.

Also, according to Greek banking officials, certain technical details had not yet been determined, meaning that it was impossible at this stage to calculate or even produce rough estimates of the prospective stress test results.

The officials added that banks would have a fair idea about the stress test components around late September, stressing that even then it would not be possible for them to know whether additional capital would be needed.

Banks would be informed of the final results of the stress tests just days before they are published during the second half of October.

JPMorgan provided a reassuring note for Greek banks in announcing that it did not expect them to require additional capital injections, while also declaring that, according to its estimates, Greek banking shares were trading considerably below those of their European counterparts and possessed the capacity to rise.

In the event that these positive forecasts prove wrong and Greek banks end up needing to raise their respective capital levels, the development would require drawing money from the Hellenic Financial Stability Fund (HFSF), established to contribute to the maintenance of the stability of the Greek banking system.