Galery

1

The hot autumn of the Greek banking market begins today with two major events, which observers expect to play a catalytic role in the financial sector of the country. During a video conference, the consulting firm Black Rock Solutions will present to Greek bankers the methodology that it will use in the assessment of the particular institutions. As GRReporter informed you, the American consultants will examine on behalf of the Bank of Greece what would be the consequences of Greek government bonds swap for the Greek banks. Today, experts from the supervisory Troika of the European Commission, the European Central Bank and the International Monetary Fund began a parallel independent inspection of the financial institutions.

The experts will thoroughly examine the investment portfolio and credit history of the banks and it would not be a surprise if the Emergency Liquidity Assistance mechanism, which will provide cash to troubled banks, is triggered even in the coming days. Yesterday, the Bank of Greece announced that it is ready to trigger the mechanism in the event that a financial institution asks for help, but stressed that no bank has done this so far. Black Rock Solutions are inspecting the status of loans and investments made in 18 Greek banks by June 30, 2011. The consultants will arrive in Athens on August 29 and will acquaint the same day with the seven largest Greek banks, which will be stripped to September 14. By the end of that month, the American consultants will examine the remaining 11 smaller banks and will complete the first stage of their mission.

The parallel inspection by the representatives of the supervisory Troika is to determine which banks will have liquidity problems in the days when the financial institutions will have to provide € 10 billion for the Greek state. This money will have to cover the interest on maturing government bonds. Troubled banks will be funded from the Emergency Liquidity Assistance. The mechanism is simple - the bank files an application in the Bank of Greece, the Bank of Greece asks the European Central Bank for approval and when it receives it, provides the cash. According to experts in the Greek banking sector, even if the Emergency Liquidity Assistance mechanism were triggered it would not be a problem for the Greek financial system.

At the same time, however, the already launched roll-over of government securities has its consequences for the banks as it is not clear whether the financial burden will be charged in a lump sum or will be allocated for some period of three to six months, for example. The decision will be taken until the end of August.

In this difficult situation, the Greek banks are doing anything to secure cash by raising interest rates on deposits. Therefore, the interest rates on time deposits exceed 5% and in some banks, they reach 7-10%! And it gives positive results. According to the Bank of Greece, deposits in Greek banks grew for the first time in months. While € 21.42 billion flew out from local financial institutions in the first six months of 2011, € 1.5 billion have returned in the first half of August.

In particular, the National Bank of Greece offers 18-month term deposit at the interest rate of 5.80%. The interest rate of the same term deposit in Eurobank EFG is 4.60%. Alpha Bank offers 12-month term deposit the interest rate for which is between 3.10 and 4.25%.
 
On Wednesday, the shares of Greek banks traded on the Athens Stock Exchange reached their lowest levels in 15 years. Analyzing the Greek economy, Wall Street Journal states today that Greece will sink into recession in the next 2012 and the gross domestic product will shrink by 2%. The newspaper expects the recession in 2011 to reach 3.9%.