Greece’s four biggest banks have reported they were so battered by losses imposed by a previous government on investors that they will need a 27.4 billion euros ($36.29 billion) injection as they try to stem more losses as the country’s economy continues to shrink.
The debt-write down earlier this year effectively wiped out the capital base of the National Bank of Greece (NBG,) Eurobank, Alpha Bank and Piraeus Bank, who are also struggling with a rapid growth of defaulted loans by consumers as Greeks have been hit with waves of pay cuts, tax hikes and slashed pensions.
NBG said it requires a capital boost of 9.7 billion euros ($12.7 billion) while Alpha needs a 4.6 billion euros ($6 billion.) Eurobank said it needs 5.8 billion euros ($7.64 billion) and Pireaus needs 7.3 billion euros ($9.62 billion.) Panagiotis Kladis, an analyst at investment services company National P+K, told the Wall Street Journal that, “This is a lot of money and investor interest in these banks will be determined by economic conditions prevailing in coming months and the economy’s broader outlook.”
As part of Greece’s second $173 billion bailout package from international creditors, Athens has earmarked about 50 billion euros ($65.9 billion) for a bank recapitalization plan, but nothing to help consumers who are being pushed by banks to pay back all their loans. Greece’s top political parties also owe the banks hundreds of millions of dollars.
Greece’s bank-rescue mechanism, the Hellenic Financial Stability Fund (HFSF,) will underwrite coming rights issues and effectively take control of the four big banks, which combined account for three-quarters of the banking system’s assets.
NBG showed a nine-month loss of 2.45 billion euros ($3.23 billion) versus a 1.34 billion euros ($1.76 billion) loss last year. Net interest income fell 11% on the year to 2.5 billion ($3.29 billion) while loan provision charges jumped 43% to 1.87 billion euros, ($2.46 billion).
Alpha Bank said its loss for January to September hit 711.8 million euros ($938.8 million) up from 566.7 million euros ($747.2 million) last year. Its net interest income dropped 16.4% on the year to 1.1 billion ($1.45 billion) while loan loss provisions hit 1.17 billion, ($1.54 billion,) up 41.5% on the year.
Trying to attract potential investors, Greek banks have been merging recently, with National Bank teaming up with Eurobank. Alpha Bank has said it would acquire the Greek unit of French lenders Crédit Agricole, and Piraeus Bank will acquire the local unit of Société Générale, Piraeus has also acquired the healthy assets of state-owned farm lender ATEBank
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