Banks confident about new stress tests

BlackRock auditors are expected next week to finalize the methodology they will use in their new stress tests for Greek banks, following their recent recapitalization.

The methodology – that is the projections to be made as regards the economy over the next five years – is of key importance as it will determine the size of banks’ possible losses from non-performing loans. It is certain, however, that this round of stress tests will not lead to recapitalization requirements as large as last year – when they were determined at 46.8 billion – as the economic outlook is markedly improved.

Also, the previous tests took place when the economy was seen shrinking by rates of up to 7 percent. And although GDP is expected to further shrink by up to 5 percent this year, the recession is expected to more or less stop next year, with rising growth rates in the years thereafter.

Bank sources are confident that any additional capital requirements will be largely covered by operational profits. “This time, the stress tests may even determine that the reserves for provisions which banks have made, exceeding 30 billion euros, is greater than the projected losses for 2013-2017,” they say.

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