Lo­cal banks pre­pare for stress tests

Kathimerini English - - Front Page - BY EVGENIA TZORTZI

Greece’s banksre­main cau­tiously op­ti­mistic about the cap­i­tal re­quire­ments that im­pend­ing stress tests will re­veal.

The as­sump­tions of the base­line sce­nario, which pre­dict an eco­nomic down­turn of -2.3 per­cent for 2015, -1.3 per­cent for 2016 and growth of 2.7 per­cent in 2017, were pro­vided by the Euro­pean Cen­tral Bank to Greek banks last week.

Greek banks have un­til to­mor­row to sub­mit the first as­sess­ment of the im­pact of these as­sump­tions on their loan port­fo­lios to the ECB.

The stress tests are be­ing car­ried out in par­al­lel with an as­set qual­ity re­view of the loan port­fo­lios of banks which be­gan this month. The au­dit is based on data re­ported on June 30 and ran­dom checks on house­hold and busi­ness loans.

Both re­views are ex­pected to be com­pleted be­fore the end of Oc­to­ber for bank re­cap­i­tal­iza­tion to take place in Novem­ber and De­cem­ber. The aim is to avoid trig­ger­ing the Euro­pean di­rec­tive re­gard­ing a bailin of de­pos­i­tors, which would come into ef­fect from Jan­uary 1, 2016. Eu­ro­zone fi­nance min­is­ters ruled out the pos­si­bil­ity of de­pos­i­tors bear­ing some of the re­cap­i­tal­iza­tion costs when they met ear­lier this month in Brus­sels to ap­prove the third bailout for Greece. The bail-in, how­ever, could po­ten­tially ap­ply to se­nior bond­hold­ers at Greek banks but not or­di­nary share­hold­ers.

The agree­ment be­tween Greece and its part­ners for the re­cap­i­tal­iza­tion of do­mes­tic banks pro­vides for the al­lo­ca­tion of up to 25 bil­lion eu­ros. The first tranche of 10 bil­lion eu­ros will be paid into a spe­cial bank ac­count, while the sec­ond will be re­leased ac­cord­ing to the re­sults of the stress tests. It may be the case that all of the 25 bil­lion eu­ros will not be needed, bring­ing down the over­all size of the third pro­gram.

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