The countdown is on for the completion of the stress tests that BlackRock is conducting at domestic banks. On November 30 the US investment management firm is scheduled to deliver the final findings of its checks on lenders’ loan portfolios to the Bank of Greece (BoG), while a week later it will deliver the results for the loan portfolios of subsidiaries abroad.
A BoG committee will then assess the capital base of each bank according to their restructuring plans along with future profits so as to determine the final capital requirements of each lender.
The five-year restructuring plans for the 2013-17 period provide for considerable reductions in operating expenses through the curtailing of staff and branch networks, as well as sales of subsidiaries and other assets.
The banks are set to collect significant funds of over 10 billion euros from their operating profits. The funds from the sale of assets, operating profits and the synergies to be created from the mergers completed, as well as the provisions banks have already made, will be deducted from their capital needs.
BoG will announce the final capital requirements of each bank after the Christmas holidays. Senior bank officials have expressed optimism to Kathimerini regarding the outcome of the stress tests. They note that the biggest loss in the previous test came from the haircut on Greek state bonds, which will not apply this time, as the exposure of banks to Greek state bonds is next to zero following the completion of the PSI and the bond buyback.
BlackRock’s worst-case scenario regarding the course of the economy provides for a 2.5 percent contraction in gross domestic product in 2014 – against an International Monetary Fund forecast for a 0.6 percent increase. For 2015, the scenario provides for a 0.5 percent GDP drop against an IMF forecast for growth of 2.95 percent, while the worst-case scenario for 2016 provides for 1 percent growth, against IMF expectations of a 3.74 percent increase. BlackRock will contrast its scenario with the IMF forecasts and determine the capital local banks will require to handle the increase in nonperforming loans.