Just two banks seen to require more capital

The country’s systemic banks were on Thursday given the provisional results of the European Central Bank’s stress tests, and analysts’ estimates point to two lenders enjoying capital sufficiency while the other two are believed to have limited and manageable capital needs.

Under strict orders from the ECB, Greek banks revealed nothing yesterday regarding the letters informing them of their requirements as calculated by the exercise’s results. The general sense is that the picture for local lenders will be particularly positive, and even where capital needs do emerge they will be quite small.

Converging estimates by analysts suggest that two domestic banks are fully capitalized even according to the worst-case scenario, while the other two will have marginal to small capital needs. A Reuters report on Thursday argued that Alpha Bank does not have any capital needs, even without taking into account its restructuring plan as approved by the European Commission. However Alpha sources have refused to make any comments on the issue.

The banks will be able to challenge the results or submit any observations by Saturday afternoon for the ECB to examine them and, if deemed necessary, to incorporate them into the final results. On Sunday morning the ECB will examine and approve the definitive results and publish them early in the afternoon.

As far as local banks are concerned, the ECB will present their static picture based on the 2013 financial reports, while also assessing their state after the incorporation of dynamic elements such as the latest financial results, deferred tax, restructuring moves etc. Bank officials note that the static picture does not really matter because what counts is whether any capital requirements will emerge and how big they are.

Once the results are issued, the banks will inform their shareholders and the broader public early on Sunday evening about their performance in the exercise. Any banks with capital requirements must inform investors about their plans and actions to that end on the same day.

If expectations prove correct and the test results are generally positive for the local credit sector, then the road will open up for the alternative utilization of the reserves of 11.3 billion euros that the Hellenic Financial Stability Fund holds.

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