ECB may in­crease cap­i­tal de­mands for stress tests

Kathimerini English - - I N T E Rv I E W -

The Euro­pean Cen­tral Bank may in­crease the min­i­mum reg­u­la­tory cap­i­tal that Greek lenders are re­quired to hold to pass their latest stress tests, ac­cord­ing to an Athens- based of­fi­cial with knowl­edge of the mat­ter. The ECB may set the pass mark for ad­justed com­mon eq­uity Tier 1 cap­i­tal at 9.5 per­cent in a base­line sce­nario and at 8 per­cent in an ad­verse en­vi­ron­ment, said the per­son, who asked not to be named be­cause the process isn’t public. In last year’s pan-Euro­pean test, the pass marks were set at 8 per­cent and 5.5 per­cent re­spec­tively. In­creas­ing the thresh­olds would mean that lenders may have to raise more cap­i­tal from share­hold­ers and bond­hold­ers. As much as 25 bil­lion eu­ros from Greece’s latest bailout has been ear­marked to back­stop the re­cap­i­tal­iza­tion of banks, and euro-area fi­nance min­is­ters said in Au­gust that se­nior bond­hold­ers may have to take losses be­fore public money is used. Of­fi­cials at the Bank of Greece and the ECB de­clined to com­ment on the reg­u­la­tory cap­i­tal re­quire­ments. Re­sults of the cur­rent ex­er­cise, which also con­sists of an as­set qual­ity re­view, will be pub­lished around the end of Oc­to­ber, ac­cord­ing to the Hel­lenic Fi­nan­cial Sta­bil­ity Fund, the state-owned en­tity that is the big­gest share­holder in the four lenders. Hav­ing lost more than 43 bil­lion eu­ros of de­posits in the past year amid doubts about Greece’s place in the cur­rency bloc, the na­tion’s banks are now kept afloat by al­most 90 bil­lion eu­ros of emer­gency liq­uid­ity ex­tended by the ECB.

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