De­ferred tax as­set in­clu­sion to boost Greek banks’ cap­i­tal bases

Kathimerini English - - Front Page - BY YIAN­NIS PAPADOYIANNIS

The Bank of Greecede­ci­sion in fa­vor of ac­knowl­edg­ing the full amount of avail­able de­ferred tax as­sets (100 per­cent com­pared with 20 per­cent un­til now) as part of the com­mer­cial lenders’ cap­i­tal bases con­sti­tutes a ma­jor boost for lo­cal banks amount­ing to about 5 bil­lion eu­ros in to­tal.

This of course is ben­e­fi­cial to the banks solely in terms of ac­count­ing, with the im­pact of the stress tests ex­pected to be smaller while the de­ci­sion also de­pends on the ap­proval of the coun­try’s cred­i­tors.

Bank of­fi­cials have told Kathimerini that the to­tal de­ferred tax as­sets, mostly con­cern­ing the great losses from the pri­vate debt re­struc­tur­ing (PSI), amounted to 9 bil­lion eu­ros, with just 4 bil­lion of that hav­ing been in­cluded in the banks’ fi­nan­cial re­ports. Cru­cially for banks, the ac­count­ing boost to their cap­i­tal ad­e­quacy in­dices takes all the sys­temic lenders well above the 8 per­cent thresh­old, un­der which fund­ing is only con­ducted through the lo­cal cen­tral bank’s emer­gency liq­uid­ity as­sis­tance (ELA).

Ac­cord­ing to es­ti­mates by Euroxx Se­cu­ri­ties, the Core Tier I in­dex based on pro forma data for the first nine months of 2013 stood

of de­ferred tax as­sets into Al­pha Bank’s cap­i­tal base is set to take its Core Tier I in­dex to 14.5 per­cent, well above the nec­es­sary thresh­old of 8 per­cent set by the Euro­pean Cen­tral Bank. at 15 per­cent for Pi­raeus Bank, 14.5 per­cent for Al­pha, 13.5 per­cent for Eurobank and 10.1 per­cent for Na­tional, which has only rec­og­nized 1.6 bil­lion eu­ros of its de­ferred tax as­sets out of a to­tal 4.5 bil­lion.

Another boost to banks has come from the de­cline in the cost of fund­ing, which gath­ered pace in the pe­riod from July to Novem­ber 2013. At end-Septem­ber the av­er­age in­ter­est rate for new de­posits came to 1.81 per­cent, against 2.51 per­cent in May and 2.75 per­cent in Septem­ber 2012. That means that the av­er­age in­ter­est rate of new de­posits has dropped by over 34 per­cent within just one year.

The in­clu­sion of 100 per­cent

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