Banks Seen Passing Stress Tests

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The stress tests appear to have come to a happy conclusion for Greek banks, as contacts between lenders’ senior officials over the last few days and the European Central Bank and its Single Supervisory Mechanism (SSM) are said to have indicated that Alpha, National, Piraeus and Eurobank come through the gauntlet.

Credit sector sources tell Kathimerini that all four banks emerged successfully from the ECB exercise, even surviving the adverse condition scenario. This included Piraeus Bank, which many analysts were concerned would face problems due to its high volume of nonperforming loans.

Kathimerini understands that in the context of a capital strengthening plan, Piraeus will be submitting a share capital increase, albeit a small one, which will be implemented over an extended period of time.

This significant success is being credited to Piraeus’s new management, which is seen achieving in just a short period of time the challenge of banishing previous doubts and proceeding decisively to tackling its bad loans.

There might,of course, be some last-minute changes until the formal announcement of the stress test results early next month – probably on Friday, May 4 – but its appears unlikely.

The expected result is a very positive development, not only for the credit system but also for the country in general, with the contribution of the Bank of Greece being crucial. The central bank had formed a special task force to monitor the process day and night, it assisted in the understanding of the technical parameters and worked closely with the ECB for the immediate resolution of any problems that emerged.

Bank sources argue that this stress test was much more challenging than those in 2014 and 2015. The sector can now revert to normality and look forward to a definitive exit from the crisis, as past talk about forced bank mergers and even about a deposit haircut (bail-in) is being rebuffed.