Replenishing banks’ capital bases raises questions, begs answers

With market liquidity having virtually dried up, the question of what exactly has happened to the 50 billion euros, part of the second bailout memorandum, that would be devoted for the recapitalization of Greek banks, is being increasingly heard.

The losses sustained by banks as a result of the haircut on their bond holdings under the so-called Private Sector Initiative (PSI) amounted to 37.7 billion euros, while BlackRock estimated further writedowns of 46.8 billion after checks for nonperforming loans – making a total of 84.5 billion.

The banks raised 41.9 billion by selling other assets, and after calculating offsetting provisions and other earnings, their capital bases were still 20.48 billion in the red. After recapitalization, they now stand at 20.80 billion euros.