Lenders’ needs likely to be man­age­able

The stress test re­sults are ex­pected to show that the pri­vate sec­tor won’t need to in­vest more than 6 bln eu­ros

Kathimerini English - - Focus - BY YIAN­NIS PAPADOYIANNIS

The re­sults of the stress tests on Greek banks will ap­par­ently be quite man­age­able by the lo­cal credit sec­tor, as Kathimerini un­der­stands that the lenders will need to draw some 5 to 6 bil­lion eu­ros from the pri­vate sec­tor in or­der to avoid be­ing na­tion­al­ized.

An­a­lysts’ con­verg­ing es­ti­mates sug­gest that Al­pha Bank will need a share cap­i­tal in­crease of about 600-700 mil­lion eu­ros, Eurobank will re­quire 1.2 bil­lion, Na­tional Bank will need 1.5 bil­lion and Pi­raeus Bank will have the high­est re­quire­ments, amount­ing to 1.7 bil­lion eu­ros. Such amounts are con­sid­er­ably lower than ini­tial es­ti­mates, ap­pear­ing man­age­able and cre­at­ing ex­pec­ta­tions that all four banks will be able to draw the nec­es­sary funds from the mar­ket.

Th­ese fig­ures have been cal­cu­lated af­ter the in­clu­sion of the ben­e­fits that will de­rive from debt/eq- uity swaps as well as the re­struc­tur­ing plans. In the case of Na­tional, its cap­i­tal re­quire­ments have been cal­cu­lated based on the sale of a 40 per­cent stake in Fi­nans­bank, as the orig­i­nal plan had pro­vided for.

Us­ing the as­set qual­ity re­view (AQR), the stress tests and the ad­verse macroe­co­nomic sce­nario, the Euro­pean Cen­tral Bank is set to an­nounce two re­sults re­gard­ing the amount of the cap­i­tal re­quire­ments next week.

The first will be de­ter­mined by the sum of the AQR and the base­line sce­nario, es­ti­mated to be close to 9 bil­lion eu­ros, while the sec­ond will be formed by the sum of the AQR and the ad­verse sce­nario, thought to be around 20 bil­lion eu­ros.

For the lenders to avoid be­ing na­tion­al­ized, they will need to draw suf­fi­cient funds from the mar­ket to cover the re­quire­ments of the first re­sult from the AQR and the base­line sce­nario – i.e. a sum of about 5-6 bil­lion eu­ros, giv- en the de­duc­tion of the ben­e­fits from the re­struc­tur­ing plans and the debt/eq­uity swaps, es­ti­mated at 3-4 bil­lion eu­ros.

The ad­di­tional re­quire­ments to stem from the sec­ond, ad­verse sce­nario will be cov­ered by the state sec­tor. To avoid a ma­jor de­cline in the state’s stake, the Fi­nance Min­istry is con­sid­er­ing the cov­er­age of 80 per­cent of the ad­verse sce­nario’s needs through con­vert­ible bonds (Co­Cos), and 20 per­cent through com­mon shares with vot­ing rights.

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