Galery

1

BlackRock's report will be submitted to the Bank of Greece at the beginning of January 2012 as became clear early this week. Its results will determine the future of the banking industry. Another crucial factor for the restructuring of the banking system of the country is the outcome of the face value reduction of Greek government bonds held by private funds.

Prime Minister Lucas Papademos had talks with the Chairman of the National Bank of Greece Vassilis Rapanos and its Chief Executive Officer Apostolos Tamvakakis behind closed doors. The financial institution is seeking from its preferred shareholders one billion euro for its capital increase to withstand the financial pressure of the debt crisis. The National Bank of Greece announced that it will bring one billion euro, explaining that at the time of the first allocation of capital it used less than its due and it is now time to put it towards fighting the crisis. Piraeus Bank is taking the same measures. It increased its capital by 400 million euro to comply with the capital stock requirements for the next year, which exceed 10% under the Tier Core 1index.

The decline of confidence in the Cypriot and Greek banking systems has made depositors withdraw a large part of their deposits, as seen in the results for the third quarter of 2011. For the period from August to September this year, deposits fell by 8.3 billion euro, and the losses from the beginning of the year are more than 28 billion euro. Currently, the total deposits value in the six largest Greek banks is 204.2 billion euro. It appears that this trend will continue for Alpha Bank, Eurobank EFG, Marfin Popular Bank, Piraeus Bank and Bank of Cyprus in the next few quarters.

Another serious problem for local banks remains the reduction of revenue. More loans are in the red. People are not able to meet their obligations on time, and new loans are not granted because there is no market liquidity overall. Due to the total bad loans in the third quarter also the relevant index of the six banks jumped to 11.3% from 9.8% in the previous period from April to June 2011 and by 8.9% since the beginning of the year. The most difficult is the situation of Eurobank EFG and Alpha Bank, in which the bad loans have jumped respectively to 13.8% and 12.3% of the total loan portfolio. The indexes of Bank of Cyprus and Marfin Popular Bank are significantly lower - 8.6% and 8.7% respectively. The reduction in loans is already causing a negative impact on interest income and related activities. Loans fell by 1% or 2.3 billion euro for the third quarter of this year.

Meanwhile, the Athens Stock Exchange tumbled to its lowest levels in 19 years. On Monday, it closed at 650.5 basis points and the total value of transactions reached 23.76 million euro. Most affected was the National Bank of Greece, which has lost another 5% of its shares value and currently they are traded for 1.51 euro per share. According to government spokesman Pandelis Kapsis, the next month and a half will be the most difficult period for the current government. It has to complete the renegotiation of the exchange of Greek government bonds during this period and sign the final version of the new contract for financial aid. The end of these two processes will determine the date of new elections. By closing this chapter of Greek history, bankers hope that better days for the country will come.