Hardouvelis does not see ‘big surprises’ in ECB stress tests

Greek Finance Minister Gikas Hardouvelis said in an interview published on Saturday he did not expect the European Central Bank’s health checks to show major surprises for Greek banks.

Violent swings on financial markets in the past week have deepened investors’ anxiety about what Europe’s review of the health of its banks will reveal later this month.

The European Central Bank’s Asset Quality Review (AQR) of 130 leading banks and stress tests of their ability to withstand a future crisis are supposed to shore up confidence by drawing a line under the euro zone crisis.

“I cannot know the results, but I believe that there won’t be any big surprises,» Hardouvelis told weekly Realnews.

“Should they need additional capital, I think that they will be able to raise it rather easily from the market.”

The ECB will release the results of its EU-wide bank stress tests on Oct. 26.

Greece’s four biggest lenders, National Bank, Piraeus Bank, Alpha Bank and Eurobank, which control about 90 percent of the industry, suffered heavy losses in recent years due to rising bad loans and their participation in a debt restructuring programme (PSI) aimed at relieving the country’s debt burden.

All four have been recapitalised twice after two stress tests by the Greek central bank.

The lenders were rescued by the European Union and International Monetary Fund, which set aside 50 billion euros in a bank rescue fund (HFSF) to clean up the sector after its battering in the country’s sovereign debt crisis.

Hardouvelis did not provide any estimates on possible capital shortfalls for the top four banks.

The Hellenic Financial Stability Fund (HFSF) has 11.4 billion euros in leftover money which Athens hopes to use as a reserve to cover its funding needs after the end of the year, when it hopes to exit its bailout programme, over a year ahead of schedule.

Hardouvelis told the paper the remaining HFSF funds could be tapped by Greece as an emergency cushion.

“I am positive on having a strong reserve which we could tap and raise funds in an hour of need,» he said, adding that the change of usage of the HFSF funds would require the approval of some European parliaments.

“Such a project – changing the use – won’t be as difficult as finding new funds from our lenders», he said.


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