Greece’s lenders need to boost their capital by 6.38 billion euros ($8.84 billion) after six years of recession and the country’s financial crisis left them with swelling bad loans, the central bank said.
National Bank of Greece SA, the country’s biggest lender, needs to raise 2.18 billion euros, according to an e-mailed report by the Athens-based Bank of Greece today. Piraeus Bank SA (TPEIR), the second-largest, has a shortfall of 425 million euros, while Eurobank Ergasias SA (EUROB), the No. 3, needs 2.95 billion euros and Alpha Bank (ALPHA) should raise 262 million euros, bringing the total needs of the country’s four biggest lenders to 5.82 billion euros.
Euro area and International Monetary Fund officials are trying to return Greece to fiscal and financial health after a crisis that nearly pushed the country out of the currency bloc and saw its economic output shrink by about a quarter since 2008. Non-performing loans have swelled to more than 30 percent along with an unemployment rate that was 27.5 percent in December, according to the Hellenic Statistical Authority today.
Piraeus Bank, the second-biggest bank, said in a separate statement it plans to raise 1.75 billion euros to repay preferred shares of 750 million euros and to boost its capital ratios as non-performing loans stood at 36.6 percent of total loans last year. Of the so-called non-systemic lenders, Attica Bank (TATT) needs 397 million euros and Panellinia Bank needs 169 million euros, the Bank of Greece report said.
Talks with the troika of the European Central Bank, IMF and European Commission on reforms included in existing aid programs started last week, with differences surfacing over the Greek central bank’s estimate of bank capital needs. The IMF wants a greater say in the fate of Greek banks because it’s worried that the ECB is being too lenient on them, three people with knowledge of the matter said.
The ECB is currently conducting its own Comprehensive Assessment into the region’s biggest lenders, including the four Greek banks. The stress test results published today as part of Greece’s bailout program, based on an assessment of BlackRock Inc. (BLK), differ in methodology from the ECB-led asset review and test to be published in October. An ECB spokesman declined to comment on today’s results as did an IMF spokeswoman.
The IMF, which views the BlackRock assessment as too optimistic, is concerned that the ECB didn’t push the Greek central bank hard enough to revise BlackRock’s findings, said the people, who asked not to be identified as the talks are private.
The Hellenic Financial Stability Fund is ready to assist Greek banks in their capital increases if they ask, Chief Executive Officer Anastasia Sakelariou said in an e-mailed statement.
To contact the reporters on this story: Marcus Bensasson in Athens at firstname.lastname@example.org; Christos Ziotis in Athens at email@example.com; Nikos Chrysoloras in Athens at firstname.lastname@example.org