The government’s plan to reduce the level of the capital adequacy index for Greek banks to below 10 percent, in the context of the local credit sector’s consolidation, is set to lower the cost of the major project of bank recapitalization by more than 2 billion euros.
The regulation for the application of the 10 percent Core Tier I rate was seen coming into force next summer, but the government intends to discuss the issue with the representatives of the country’s creditors -- known as the troika. The reduction in the rate rise to below 10 percent will most likely be included in the revised memorandum of understanding to be signed after the completion of negotiations with the troika.
This would reduce the amount of funds required for the recapitalization of the local credit sector by about 2.3 billion euros. The obligation for an increase to the capital adequacy index to 10 percent has only been imposed on Greek lenders and it would constitute a paradox if it were maintained at that level when the threshold of all other banks in the European Union is 9 percent.