The amount of capital requirement for the recapitalization of Greece’s four systemic banks may fall much lower than estimated a couple of months ago. “The amount could be 14 billion euro,” Greek media report noting that “this creates optimism in the government and the Greek bankers that the recapitalization will be completed successfully by the end of the year.” Under the summer deal between Greek government and the creditors, the amount for the banks recapitalization was ‘set’ at 25 billion euro. If the recapitalization does not conclude until the end of 2015, depositors will be enforced to participate in the banks “bail-in” and add their share to cover the capital needs, as the relevant EU legislation goes into effect on 1.1.2016.
Before the recapitalization process begins and the technical details can be set, the results of the stress tests for National Bank of Greece, Piraeus Bank, Alpha Bank and Eurobank are to be officially announced by the Single Supervisory Mechanism of the European Central Bank tomorrow Saturday, October 31st at 11:30 am local time. Unofficially, the four banks will be noticed of the results already on Friday afternoon, some media reported yesterday.
Deputy Prime Minister Giannis Dragasakis said that “the recapitalization bill will have been voted by Sunday” and that “the recapitalization process will begin on Monday.” Dragasakis stressed that previous recapitalizations failed because they were done without settlement of the red loans, that are “the black hole.”
“Therefore together with the recapitalization we will immediately proceed to tackle the issue of the red loans with a policy framework that will protect the first residence [foreclosures], will prevent the purchase and sale of loans, because even when ti comes to business loans what matters is the enterprise, the production capacity, the employment, ” Dragasakis said adding that “now we want to link the regulation of corporate loans with the country’s productive recovery plan.”
However, disagreement between Greek government and the creditors representatives have emerged concerning the mechanism to tackle the non-performing loans (red loans).
“Athens wants protection from foreclosures to cover property values of at least 200,000 euros. Lenders say the threshold should be about 120,000 euros,” Reuters reported.
Reuters also spoke of recapitalization amount of 14 billion euro, noting that “private shareholders will be invited to meet recapitalization needs amounting 4.5 billion euro.” However, according to other sources, the private shareholders may be invited to participate with a higher amount “of some 8 billion euro.”
Citing sources from an IMF briefing to European authorities, daily Ethnos notes that “the recapitalization amount could be 13 billion euro.”
While the Greek side is optimist about the success of the banks recapitalization, the EU Commission keeps sticking to the rules.
“Euro group conclusions on this question are quite clear, that recapitalization of the banks is to take place after the first review, but no later than the 15th of November,” EU Commission Vice-President Valdis Dombrovskis told Greek private Skai TV in an interview on Thursday.
PS I assume that next to recapitalization, the banks will also be reformed so that they pay a higher ‘honorable fee’ to the depositors whose money the banks borrow in order to be able to lend money. And increase the ridiculous deposits interest rates from the despicable 0.75% gross, that is 0.60% net after 15% tax.
*** We are fed up to feed and save the banks ***