ECB stress tests should in­clude banks’ re­struc­tur­ing plans

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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