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Greek Banks Face $18.5b Capital Loss Under Stress Test

Alpha Bank has performed best among the four banks.Alpha Bank has performed best among the four banks.

Greece›s four biggest banks said on Saturday that no new funding plans were needed after stress test results showed they would lose around €15.5 billion ($18.57 billion) of their capital by 2020 under an adverse economic scenario.

The health check by the European Central Bank, aimed at uncovering any capital shortage before Athens exits its €86 billion bailout in August, was carried out separately from a stress test of other eurozone banks, Reuters reported.

Test results for 33 lenders from other eurozone countries will be published in early November.

The ECB›s stress test of Greece›s four largest banks—Piraeus, NBG, Eurobank and Alpha—was done early to allow time for any possible capital shortfall to be filled before Athens leaves its bailout.

Among the banks, Alpha Bank performed best as its Common Equity Tier 1 ratio, or CET1, would drop by 8.56 percentage points to 9.69% according the adverse scenario of the test.

It would drop by 8.68 percentage points to 6.75% for Eurobank, 9.56 percentage points to 6.92% for National Bank of Greece and 8.95 percentage points to 5.90% for Piraeus Bank.

According to the ECB, the 2018 health check was not a pass or fail exercise as no predetermined capital threshold was set that would trigger a need to recapitalize.

«Any recapitalization decision will be taken on a case-by-case basis, after assessing each bank›s situation in the light of the results of the stress test and any other relevant supervisory information, following a holistic approach,» the ECB said.

Greek banks have been recapitalized three times since a debt crisis exploded in 2010, but are still burdened by €96 billion of soured debt. They have committed to targets to reduce that load to €65 billion by 2019.

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