Ailing Greek banks, which have already received 41 billion euros in an injection of state money from bailouts, will need another 6.382 billion, stress tests performed by BlackRock Solutions has recommended, less than the nine billion estimated by international lenders.
The estimate was made after an analysis of the troubled loan portfolios the National Bank, Alpha, Piraeus and Eurobank along with five smaller lenders late last year, the Bank of Greece announced.
The central bank’s much-anticipated report said that in the period from 2014 to 2016, local lenders will suffer losses of 50.24 billion euros from nonperforming loans in Greece, plus another 10 billion euros from bad loans issued abroad.
The needs of Greece’s lenders are estimated at: 2.945 billion euros for Eurobank, 2.183 billion euros for National, 567 million euros for Attica Bank, 425 million euros for Piraeus, 262 million for Alpha and 169 for Panellinia, while the three other banks (all of which are smaller than the others) will need no additional funds.
The question of how much the banks would need and from where the money would come was one of the obstacles hanging up a an agreement with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) before Greece can get a delayed nine billion euro installment from the remains of two rescue packages of 240 million euros that runs out this year.
Bank officials estimate that bad loans were close to 35 percent at the end of December, 2013, and that they will continue to increase this year too, although at a slower pace, before peaking in 2015 and starting to decrease from the year after that.
Among the bad loans is 250 million euros owed by the ruling parties of the New Democracy Conservatives and PASOK Socialists who got the money without collateral, aren’t repaying it, and gave immunity to the bank officers who approved the deals and then gave banks the 41 billion euros from the bailouts.
The stress results came as Piraeus announced it will initiate a major share capital increase of 1.7 billion euros, while Alpha is expected to announce its own increase on March 7, likely to amount to 1 billion euros. National said it can cover its requirements without a share capital increase. Piraeus also announced profits of 2.53 billion euros for 2013 at the same time it said it needs more money.
The Bank of Greece has also asked lenders to submit their plans to strengthen their capital bases by April 15. BoG sources said that the plans should be implemented as soon as possible and that the issue is being negotiated between the government and its creditors, while banking sources said at least six months will be required.
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