Greek bank shares jump as IMF says no need for asset quality check
ATHENS: The International Monetary Fund (IMF) on Thursday backed away from a demand for an asset quality check on Greece’s banks after a proposal by the European Central Bank (ECB) to bring forward planned stress tests next year, driving a rebound in the shares.
The IMF’S previous calls for an asset quality review had sparked fears of another dilutive capital injection for banks’ shareholders, hammering the sector with steep losses of more than 30 per cent since mid-august.
“On the subject of the Greek banking system, let me emphasize that we see no financial stability concerns at all in Greece,” Poul Thomsen, head of the IMF’S European Department, said in a statement.
“The issue is that we need to be sure that there is a strategy to deal with Greece’s exceptionally high level of non-performing loans over the medium term.”
Thomsen’s statement followed hints by Greece’s finance minister on Wednesday that the fund would drop its demand for an asset quality review (AQR), echoing comments by an IMF spokesman in Washington.
Greek banks have been recapitalised three times since the debt crisis exploded in 2010 but are still burdened by 100-plus billion euros of soured debt. They have committed to targets to reduce the load to 66 billion euros ($78 billion) by 2019.
“It’s a relief rally on the back of what appears to be a clearing of a blurry backdrop,” said Eurobank Securities analyst Nick Koskoletos.
Greece’s four big banks - Piraeus, National , Eurobank and Alpha will be part of pan-european stress tests next year by the European Central Bank.
The Athens bourse’s banking index was up 10.3 per cent, adding to early trading gains, on what traders said was relief that a compromise was reached on the issue.
The ECB has offered to bring forward its stress test of the Greek banks, finalising data before Greece exits its three-year, 86-billion-euro international bailout in August.
After two years of wrangling over debt relief, the IMF agreed to support conditional participation in June as part of a deal that unlocked 8.5 billion euros in loans
The ECB, which supervises top Greek banks, has firmly rejected the IMF’S push for a fresh asset quality check.
Thomsen said the ECB’S proposal to bring forward its planned pan-european bank health test and undertake targeted asset reviews was constructive.