Greek investors have in effect ruled out of the recapitalization process for local banks, as the capital controls prevent their participation, while the bill for the process was set to be tabled late on Thursday in Parliament and will be voted on Saturday. Sources add that the administrations of certain banks are considering addressing only foreign institutional investors due to the tight timetable.
Just hours before the European Central Bank announces the stress test results on Saturday, there is optimism among lenders regarding the level of their capital requirements.
However, they are not hiding their concern about the participation of bondholders in case of a bail-in, as well as the way the share capital increases will take effect, as these factors may keep investors away.
A Reuters report has put the estimated sum of capital requirements for the country’s four systemic banks at 14 billion euros, according to the exercise’s adverse scenario. However, when the restructuring plans are factored in, the requirements of banks according to the baseline scenario (which lenders will have to cover) come to just 4.5 billion euros.
A Goldman Sachs report has put the sum of local banks’ capital needs at between 13 and 20 billion.
On Thursday Deputy Prime Minister Yiannis Dragasakis informed President Prokopis Pavlopoulos about the recap process, stressing that the law will have been voted in time for the share capital increases to begin on Monday, November 2.
“Our primary target is to perform the recapitalization in a way that does not affect deposits, which means it will have to be completed within 2015, as from next year the directive imposing a haircut on deposits above a certain level will come into effect,” said Dragasakis.
He also noted that there is investor interest in the Greek banks, but there are also the disposable funds of the Hellenic Financial Stability Fund to cover any needs that may emerge. The previous recap failed because they did not tackle the issue of bad loans, he commented.