Following the successful completion of the stress tests, banks are now preparing to issue subordinated bonds, which until now had been effectively impossible.
Bank officials say the test result was a decisive step back to normalcy, stressing that it opens the way for the expansion of financing options through new bond issues, the acceleration of actions for reducing nonperforming loans and the bolstering of client financing.
The Tier 2 subordinated bonds count toward the capital adequacy index and such issues constitute a strong indication of investors’ and markets’ growing confidence. Banks issued conventional bonds last year following the state’s successful sovereign bond issue in the summer of 2017.
Furthermore, according to local banks, the successful conclusion of the exercise to see how resilient they would be under extreme conditions removes an obstacle for the further easing of capital controls, with the next target being their full removal once the bailout program is concluded in August and the post-program framework is formed. Banks sources underscore that the fact no extra capital is required by Greek banks sends a strong message of confidence in the Greek credit sector and economy to the markets.