Sunday September 21, 2014 Search
Weather | Athens
27o C
19o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Three challenges lie ahead for domestic banks

By Yiannis Papadoyiannis

The effective tackling of nonperforming loans, getting credit expansion moving again and completing the return of the banking sector to private hands are the three main objectives of local lenders following the successful completion of the second stage of their recapitalization.

Having collected funds of 37 billion euros within 12 months, from both the state and the private sectors, domestic banks are now among Europe’s most robust in terms of capital adequacy. According to Euroxx data, at the end of 2013 Alpha Bank’s Core Tier 1 capital adequacy ratio stood at 16.1 percent, while Piraeus’s was 13.9 percent, Eurobank’s was 11.3 percent and National’s 11.2 percent.

Their capital bases are set to be further strengthened as all banks are implementing restructuring programs that include the sale of assets, among other measures. Therefore, by the end of 2014, National’s capital adequacy ratio will have exceeded 18 percent while Eurobank’s will be over 17 percent.

A strong capital base is absolutely necessary for banks to get nonperforming loans under control. While bad loans elsewhere in Europe come to an average of 6.1 percent of all credit, in Greece they climbed to 33 percent in the first quarter of the year – over five times more. Senior officials at local lenders say that effective management of NPLs can make the difference.

Banks expect NPLs to increase further within 2014, albeit at a declining rate, and reach their peak since the start of the financial crisis. In 2015 they are seen posting a small drop, while a substantial decrease is forecast for 2016. By 2017 they are expected to have fallen below their current level.

The second major challenge for the credit sector, which will also determine the declining rate of bad loans, is the return to an increase in the issue of loans. Banks estimate that the drop in the sum of loans to the private sector will continue through the first half of 2014 but that it will stabilize in the third quarter and post a slight increase in the last quarter of the year.

On an annual basis, banks expect negative credit expansion of 3 percent for the whole of 2014. Therefore, in the period from 2010 to 2014, the sum of loans will have declined by a total of about 50 billion euros, or 18 percent.

That period is expected to come to an end in 2015, when loans to enterprises and households will start picking up again. As senior bank officials say, the sooner Greece achieves this return to credit expansion, the sooner bad loans will begin to drop.

The other crucial front for lenders, and the local economy in general, is the banks’ return to the private sector. The Hellenic Financial Stability Fund (HFSF) is already examining alternative options in a bid to accelerate the utilization of shares committed to the warrants issued during the recapitalization process. The aim is to denationalize the banks as soon as possible – as the country’s bailout agreement with its creditors also dictates – taking advantage of the favorable climate generated by the economy’s apparent return to a course of growth.

Once the systemic banks are back in private investors’ hands, the HFSF will be able to return part of the funds used for the 2013 recapitalization earlier. The HFSF is already set to cash in all the funds invested in Alpha (3.96 billion euros) and Piraeus (6.8 billion) as well as a considerable part of the capital used for National and Eurobank.

Today the holdings of the HFSF in the four banks total 15 billion euros. Adding the unused stock of 11 billion euros from the recap budget, the HFSF may soon be able to return over 26 billion euros to the state.

ekathimerini.com , Friday May 23, 2014 (19:57)  
Demand for diesel boosts total fuel sales
Foreign investors not overly concerned about political risk
IMF unhappy over social security debt collection
Agenda
Results of probe into 20 Lagarde list names due soon
Members of the Financial Crimes Squad (SDOE) and tax inspectors involved in an investigation into the so-called Lagarde list of Greeks with Swiss bank accounts expect to be able to announce ...
Police refute reports of Jihadi training
Greece is not a training ground for Jihadis, the Greek police said in a statement released late on Friday in response to reports in the local media claiming that radical Islamists have been ...
Inside News
SOCCER
Triumph for PAOK, historic result for Asteras in Europa League
Greek teams produced a patchy record on the opening night of the Europa League group stage on Thursday, as PAOK thrashed Dynamo Minsk, Asteras Tripolis snatched a draw at Besiktas and Panath...
SOCCER
Financial crisis forces Greek second division postponement
Greece's second soccer division Football League announced on Wednesday the postponement of the start of the season due to financial difficulties being faced by most clubs. "The board of dire...
Inside Sports
COMMENTARY
Universities threatened by transfers
The problem arising from the abuse of the Greek university transfer system – whereby some students are allowed to move to an institution of their choice instead of the one they were admitted...
EDITORIAL
Capital changes
A sizable part of the middle of the Greek capital has been slated to receive a significant makeover with the implementation of an urban restructuring project which includes turning a key cit...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Demand for diesel boosts total fuel sales
2. Foreign investors not overly concerned about political risk
3. IMF unhappy over social security debt collection
4. Agenda
5. Results of probe into 20 Lagarde list names due soon
6. Police refute reports of Jihadi training
more news
Today
This Week
1. Agenda
2. IMF unhappy over social security debt collection
3. Foreign investors not overly concerned about political risk
4. Demand for diesel boosts total fuel sales
5. ‘Greece can meet its needs on its own’
6. Record sum of new debts to the state in August
Today
This Week
1. Greece on standby
2. Greece at bottom of social justice scale among EU28
3. Central Athens traffic restrictions back in force on Monday
4. ‘Greece can meet its needs on its own’
5. Lost in the fog
6. Record sum of new debts to the state in August
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.