Greek banks are asking the European Central Bank to allow them a few years for their capital strengthening, should such a requirement arise from a marginally negative result for one or more lenders following this spring’s stress tests.
In the negotiations that are under way ahead of the tests that begin next month, local banks are asking for greater flexibility in terms of the time frame for the coverage of capital needs in the context of the Supervisory Review and Evaluation Process (SREP).
SREP constitutes a crucial monitoring system in the context of the single banking supervision, to ensure that the credit institutions have the necessary strategies, protocols and mechanisms as well as the capital and cash needed for banks to operate unhindered and efficiently, and withstand the pressure of any new crises.
In the coming weeks the ECB will inform the managers of domestic lenders of the stress tests’ macroeconomic parameters, which to a great extent will determine the final result. On the whole, local bank officials are optimistic about the outcome, noting that the improvement in economic conditions in 2017 and 2018, the banks’ strong capital base and the reduction of bad loans create sufficient safety cushions.