Banks can focus on future after successful stress tests

The clean bill of health that Greek banks secured from the European Central Bank stress tests on Sunday allows the local credit sector to focus on financing the economy and dealing with bad loans, top bankers have told Kathimerini.

Not only did the results of the exercise show the local credit sector to have no capital requirements but they actually revealed a capital surplus of 4.5 billion euros. In fact, as the results did not factor in the deferred tax credits, that will boost the banks’ capital bases by another 2.5 billion euros.

The country’s top bankers stressed four main points, with the first being that the results for Greece were much better than even the most optimistic estimates. The second is that the dispute over local banks’ capital status can finally be put to rest. When the Bank of Greece published the results of its own tests conducted with the help of BlackRock last March, reports in the global media and even International Monetary Fund officials challenged the results, speaking of 20 billion euros in capital needs. Furthermore, the 11.3 billion euros sitting in the bank bailout fund will come into the government’s hands, while now that the tests are finally over banks can focus on their main work – assisting the country’s growth.

Fully satisfied with the results, the systemic banks’ top brass told Kathimerini that their strategies have been vindicated: “After the successful completion of the test, the road is open for the privatization of Greek banks,” noted Michalis Sallas, Piraeus Bank’s chief executive. “The result contributes to the consolidation of confidence, which is crucial for the smooth operation of the economy,” added Alpha CEO Dimitris Matzounis.

“Greek banks can now fulfill their main mission; that being the funding of Greek economy,” stressed the CEO of National, Alexandros Tourkolias, with his Eurobank counterpart, Christos Megalou, adding that “a key point now is how nonperforming loans will be dealt with.”

Bank of Greece Governor Yannis Stournaras told Kathimerini that the positive prospects will not automatically turn into reality. He said that the good results should not be the pretext for complacency, as the good picture that has emerged is thanks to the dynamic model – i.e. what has to be done in the next few months. It is therefore crucial, he underscored, that banks implement their restructuring plans as submitted to and approved by the European Commission, and that the country remains politically and economically stable.

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