The government has left it desperately late for the voting of the legislative framework for the recapitalization of banks, although the bill should have cleared Parliament by October 15, according to the bailout agreement. Sources say that the draft law will be tabled in the next few days, and definitely by Friday, as the results of the banks’ stress tests will be issued on Saturday.
A number of marathon meetings took place over the weekend between government officials and the representatives of the country’s creditors aimed at discussing all the technical aspects of the recap process as well as operational issues of the Hellenic Financial Stability Fund (HFSF) so that the draft law could be completed, but it appears that was not possible.
Government sources tried to allay concerns about the tight schedule, stressing that the bill would be immediately tabled. Last Thursday, after a cabinet meeting, the government had announced that the recapitalization bill was ready. It is clear, however, that there has been a significant delay, despite the fact that the threat of a deposits haircut hangs over any failure to complete the process by the end of the year.
The European Central Bank will announce the results of the Greek banks’ stress tests at 11.30 a.m. on Saturday, Greek time. Frankfurt will publish the capital requirements of each bank based on the baseline and adverse scenarios of the exercise.
Analysts say that the capital requirements to stem from the adverse scenario and the asset quality review (ADR) will add up to almost 15 billion euros, and after the deduction of the restructuring plans’ value, future profits etc, the final sum of the requirements will come to 9-10 billion.
The European authorities will then ask lenders to proceed to share capital increases to cover the above amount. If they fail to do so, which is the most likely scenario, but draw a total of 5.5 billion euros and have the rest covered by the state, they will avoid both nationalization and the threat of liquidation.