ECB stress tests should include banks’ restructuring plans

Finance Minister Gikas Hardouvelis reportedly told his EU colleagues that he wants the European Central Bank’s stress tests on its four systemic banks in October to take account of their new restructuring plans rather than being based on last year’s balance sheet data alone.

The ECB is reviewing the asset valuations of the euro zone’s 128 most important lenders to assess their ability to withstand future crises and National Bank of Greece, Piraeus, Eurobank and Alpha will be among them. The results will be announced in October, before the ECB takes over as the eurozone’s banking regulator on November 4.

At issue for Athens is whether its big banks may face a new call to fill significant capital holes, since elements of the restructuring plans are still some way off being implemented, despite the banks saying they are content with their capital raising so far this year.

The four banks have already undergone recapitalisations after two successive stress tests were conducted by the Bank of Greece.

NBG, Piraeus and Alpha are majority-owned by the HFSF bank rescue fund, which pumped 25.5 bln euros into the four banks and spent another 14.4 bln euros to wind down others deemed non-viable.

Earlier this year, the four banks raised 8.3 bln euros between them through equity issues, more than filling the capital deficiencies identified in the last Bank of Greece test which amounted to a combined shortfall of 6.4 bln euros.

The head of the HFSF rescue fund, which has a remaining cushion of 11.5 bln euros, expects any capital shortfalls in the ECB check-up to be manageable.