By Evgenia Tzortzi and Yiannis Papadoyiannis
The international market has rejected the troika’s reservations regarding the capital adequacy of Greece’s three systemic banks (Piraeus, National and Alpha) – as well as estimates by Standard & Poor’s – giving a strong vote of confidence in the bonds Piraeus Bank issued this week.
S&P estimated that Piraeus and Alpha will need additional funds to retain their capital adequacy index (Core Tier I) at 8 percent, but the market has offered full support to Piraeus by oversubscribing the bonds offered six times, with an interest of 5 percent. This serves to confirm the rejection of the rating agency estimates when investors aim at the high yields that the Greek issues can offer and are by far the best among all emerging markets.
In view of this market reaction, Deutsche Bank officials told Reuters that “Piraeus offered a great platform for the borrowing of other Greek entities,” and added that “investors are now much less concerned about ratings by the agencies than before,” when it comes to hedge funds.
The ever stronger picture of the local banking sector was confirmed by National Bank’s return to profit, according to the 2013 results it issued on Thursday.
The NBG group recorded net profits of 809 million euros last year, against losses of 2.14 billion euros in 2012, with earnings in the fourth quarter alone amounting to 547 million euros, thanks to the improvement in the country’s general financial climate.
The rise in profits was attributed in particular to the declining trend in nonperforming loans, which has allowed for the reduction of provisions and the decline of the cost of deposits (i.e. interest) and of operating expenditure in Greece by 5 percent.
The contribution of Turkish subsidiary Finansbank was also significant, as it ended the year with profits of 439 million euros, despite the financial difficulties in the neighboring country during the second half of last year.