Banks expect cheap access to markets
Cheaper access to the markets for raising liquidity and financing the economy will be the first benefits to be felt by local banks from the recovery of investment grade by the Greek state. This is expected to occur in the first half of 2024 or perhaps earlier depending on the outcome of the elections and political developments.
The upgrade of the Greek economy is expected to contribute to a first de-escalation of borrowing costs for banks under the obligation to raise up to 10 billion euros of capital to cover the minimum requirements for own funds and eligible liabilities, known as MREL.
These are primarily senior preferred bonds, which Greek banks will have to issue in the next three years, the cost of which has shot up from 2%-4% in 2021 to over 8% in the last two years, after Russia’s invasion of Ukraine in February 2023 also triggered high volatility in the markets.
“The reduction in the cost of borrowing by even 1 percentage point, especially for the volume of senior preferred that the Greek banks will have to raise, will save about €100 million a year and could be doubled if the reduction reaches 2 points,” competent sources point out to Kathimerini.
