Stress test results due on May 5

Local banks see stock prices soar around their 2015 recapitalization level on the certainty of their success

The country’s four systemic banks saw their stock prices gain about 15 percent over the week after reports emerged that they have successfully negotiated their stress tests. During the week the lenders were informed in Frankfurt about the tests’ progress and the official announcement of the results is now scheduled for Saturday, May 5.

Central banker Yannis Stournaras confirmed on Wednesday that National, Alpha, Piraeus and Eurobank had even performed well under the adverse scenario of the exercise, saying, “All systemic banks are expected to show positive results as regards the simulation of extreme conditions.”

Earlier in the week National’s chief executive Leonidas Fragkiadakis had said that all Greek banks will pass their stress tests and the credit system will emerge stronger from the process.

On Wednesday and Thursday the heads of the four banks visited the European Central Bank headquarters in Germany and had discussions with senior officials of the Single Supervisory Mechanism (SSM) regarding the tests’ progress. That was a crucial meeting, as any bank that had failed under the adverse scenario would have been invited to prepare for the management of such a prospect. Failure to meet the capital adequacy index set by the regulator would entail the requirement of a capital boost, with possibly serious consequences for shareholders. Fortunately, that is not the case.

This was despite the fact that this time the tests were considerably harder for the local lenders.

The good news regarding the stress tests triggered a rally in banks stocks and the stock market in general. Alpha’s stock rose to 2.14 euros, exceeding the 2-euro price it had at its 2015 recapitalization. Likewise National soared to 0.317 euros, against a price of 0.30 euros upon its recapitalization. Eurobank grew close to its share capital increase price of 1 euro, closing yesterday at 0.978 euros, and only Piraeus is still far below its recap level of 6 euros, as despite the major gains of the past week it closed at 3.17 euros yesterday.