BUSINESS

Banks want deferred tax asset leeway

EVGENIA TZORTZI

TAGS: Banking

Banks are asking for the law concerning deferred tax assets to be extended for two years in a bid to earn time to manage the consequences of the economic crisis stemming from the coronavirus pandemic.

The request has already been submitted to the European Central Bank’s Single Supervisory Mechanism and aims to avert the possibility of the state’s stake in their share capital growing due to possible losses they may have to take from the increase in nonperforming loans this year.

The law on deferred tax assets provides that in case a bank shows losses from its activities in Greece – not on a group level – it will have to increase its share capital, and if existing shareholders do not cover that increase, then the state will step in.

The issue is a concern for local lenders, whose vulnerability depends on the intensity and the length of the economic contraction, even though the first-quarter data published to date by Alpha, National and Eurobank have shown they are not facing any major losses due to Covid-19.

Notably, banks are heavily dependent on their postponed dues as the deferred tax assets amount to 56% of Greek lenders’ share capital.

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