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The Supervisory Troika and the Bank of Greece are about to agree on the capital requirements of the four systemic banks.

Both sides have agreed that the minimum capital adequacy ratio (Core Tier I) be fixed at 8% instead of at 9% and that this will be completed as specified in the baseline scenario. The Bank of Greece will announce the results of the stress tests carried out by BlackRock at the end of next week and the next meeting of governor George Provopoulos with the lenders’ representatives will take place on Tuesday, 4 March.

"We will announce the results of the stress tests on Tuesday, 4 March. The capital requirements of the banks amount to six billion euro", George Provopoulos told the lenders during yesterday's one-hour meeting with them, indirectly asking for explanations for some publications in the Financial Times, according to which the requirements amount to 20 billion euro.

According to sources, Paul Thompsen, Klaus Masuch and Matthias Morse requested in turn some time (4-5 days) in order for the technical teams to explore the file of each bank individually, and postponed for next Tuesday the meeting at which the final agreement will be signed.

In any case, as mentioned by well-informed sources, the final data to be reported will not significantly differ from those presented to the banks’ management bodies last week. As they indicate, "the difference will not be more than 200 million euro".

Thus, within 48 hours, the publication in the Financial Times for additional capital requirements of 20 billion euro due to the significant increase in bad loans was disproved. According to sources from the Bank of Greece, the final sum will not exceed 6.5 billion euro.

Yesterday George Provopoulos submitted to the three representatives of the lenders the report by BlackRock (and the evaluation of results carried out by the companies Rothschild and Ernst&Young), which calculates the additional capital requirements of the four systemic banks at 5.5 billion - 6 billion euro.

However, there are still open questions concerning the methodology and therefore the technical teams of the Troika and the Bank of Greece will hold more meetings today, tomorrow and even on Monday, 3 March (a non-working day in Greece for the Clean Monday holiday).

It should also be noted that before the meeting with the leadership of the Bank of Greece, the lenders’ representatives had met with the management of the Financial Stability Fund.

According to sources, the Executive Director of the Fund Anastasia Sakellariou had requested explanations for the delays regarding the preliminary arrangements and for the failure of meeting them, when it comes to the Greek banks. She considered especially the issue of Eurobank and the delay in the increase of its share capital.

It should also be noted that since the banks have the preliminary data for the capital requirements identified in the report by BlackRock, the banks’ management bodies are to update the restructuring plans submitted to the Bank of Greece in order to reduce the required capital on the basis of the stress tests.

Positive signals

Yesterday the bond market and the Athens Stock Exchange recorded consecutive record levels. In particular, the levels before the memorandum reached the ten-year value of Greek bonds, which had fallen below 7% during the session, the reason for the increase being the interest of foreign investors in Greek bonds. Meanwhile, the main index marked another highest growth over the past 33 months, returning to May 2011 levels, and closed at 1303.35 points and 3.28% growth.

Banks are healthy

"Greek banks are healthy. All international investment houses acknowledge this", said the governor of the Bank of Greece yesterday, during a meeting with the Troika representatives and continued,

"The markets have completely ignored recent posts containing unsubstantiated figures, thus showing confidence in the Greek banks."

Today George Provopoulos will present his annual report to the General Assembly of the Bank and will speak again about the stability of the Greek banking system.

The governor of the Bank of Greece will stress that the second restructuring phase of the Greek banking system includes a new model for the functioning of the systemic banks (the National Bank of Greece, Piraeus Bank, Alpha Bank and Eurobank), which will allow them to recover the state aid obtained from the Financial Stability Fund and to fund the recovery of the Greek economy. George Provopoulos will mention the management of bad loans and "The Code of Ethics" for the relationship between banks and borrowers in financial difficulty, which will come into force after 2015.