Brussels, 03/11/2015 (Agence Europe) - The European Commission has said that it is encouraged by the results of the health check of the four Greek systemic banks (Alpha Bank, Eurobank, BNG and Piraeus Bank) published by the ECB over the weekend.
The ECB took two scenarios as its basis. The first, referred to as the 'baseline' scenario, saw Greek GDP drop 2.3% this year and by 1.3% in 2016, before bouncing back to 2.7% in 2017. In this scenario, the four banks would have a capital shortfall of €4.4 billion. In the second scenario, the worst-case scenario, Greek GDP would fall by 3.3% in 2015, 3.9% in 2016 and 0.3% in 2017. If this scenario came to fruition, the banks would need €14.4 billion (around €4.9 billion for Piraeus Bank, €4.6 billion for BNG, €2.7 billion for Alpha Bank and €2.1 billion for Eurobank). This, therefore, is the money the banks will have to find. They have until Friday 6 November to propose a refinancing plan to the ECB's Single Supervision Mechanism (SSM). It is worth noting that according to the Frankfurt-based institute, non-performing loans now stand at €107 billion, or half of all loans.
“We are encouraged by the results”, Commission spokesperson Annika Breidthardt said on Tuesday 3 November. “Bank recapitalisation is an integral part of Greece's efforts to restore confidence in the banking sector so that capital controls can gradually be removed and affordable lending to the economy can resume”, she added.
Quoted by Reuters, the Greek finance minister, Euclid Tsakalotos, said that the numbers, particularly under the baseline scenario, were “satisfactory”. “We have every reason to be optimistic that the recapitalisation process will be concluded by the end of the year”, he added.
According to the Financial Times, the banks are confident that they will be able to raise most of the money needed from private investors. €10 billion from the European Stability Mechanism (ESM) is already frozen in an account for the requirements of the financial institutions. According to the Greek press, the participation of the Hellenic Financial Stability Fund (HFSF) will stand at 25% through direct equity stakes and 75% in the form of convertible bonds ('Cocos').
On Saturday evening, the Greek parliament adopted a bill on the recapitalisation of the banks, whereby, for instance, in exchange for its participation, the HFSF will be directly involved in the governance of the banks. Despite this development, the Commission has still declined to state whether Greece may soon receive a sub-tranche of aid of €2 billion from the ESM. The evaluation of the prior actions is still underway, Breidthardt explained. (Original version in French by Elodie Lamer)