Greek Banks Pass ECB Stress Tests

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

Credit sector sources told Kathimerini daily newspaper that all four banks emerged successfully from the ECB exercise, even surviving the adverse condition scenario, Tornonews reported.

This included Piraeus Bank, which many analysts were concerned would face problems due to its high volume of nonperforming loans.  In the context of a capital strengthening plan, Piraeus will be submitting a share capital increase, albeit a small one, which will be implemented during an extended period of time.

This critical 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 alterations until the formal announcement of the stress test results early next month–probably on 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 came up.

Bank sources point out 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.