Lenders brace for PSI+ impact

The increase in the haircut in the private sector involvement plan (PSI+) from 50 to 53.5 percent, the write-down of loans given to state corporations and the application of stricter criteria for the definition of non-performing loans are widening the impact of the economic crisis on local banks to a significant extent.

Finance Minister Evangelos Venizelos stated on Tuesday that the capital to be made available for the recapitalization of banks will amount to 50 billion euros, against an original plan for 40 billion. He did add, however, that not all of it may be required. ?The Bank of Greece will estimate what the exact amount needed will be and we will see what the cost is,? said Venizelos.

Although estimates on the net present value impact come to 75 percent for the old bonds, bank officials suggest that it may be contained to between 63 and 68 percent.

Local banks have already factored in the impact from the original PSI in a 21 percent haircut, agreed last July.