EU rift, cash flow and NPLs worry bankers

The prospects of state control over banks intensifying, combined with an avalanche of statements and interventions by government officials which appear to herald radical changes in financial policy and are hiking the chances of a clash with the country’s creditors have led bank stocks to an unprecedented drop.

In the past week Piraeus Bank saw its stock fall 35.25 percent, Eurobank lost 29.03 percent, National declined 27.17 percent and Alpha dropped 21.36 percent.

Besides the possibility of the SYRIZA-led government intervening with a tight grip and big managerial changes, banks have plenty more to be worried about: Liquidity is continues to deteriorate, uncertainty is leading to more nonperforming loans, and, above all, the incongruous messages emitted by the new government last week have generated major concerns about a head-on collision with the country’s European peers, which could have unforeseeable consequences. The climate deteriorated further with the standoff between Finance Minister Yanis Varoufakis and Eurogroup President Jeroen Dijsselbloem last Friday, as all signs point to a rift.