The risk of further increases in share capital
In the event that the period of uncertainty drags on, the targeted profit in the restructuring plans of the four systemic banks will hardly be attained, which will drive some of them to undertake new capital increases.
Moody's has already stressed that banks must revise their forecasts for 2015, as their results are negatively affected by the collapse of the Greek economy and the significant contraction of investment activity.
The European Central Bank is closely monitoring the developments in the country and in the banks, and if it establishes significant discrepancies with the approved plans, it may require preventive measures for recapitalisation.
Furthermore, the European Central Bank has already started the inspections of the quality of their assets, which will be carried out on the basis of the data obtained in the recent diagnostic study.
Goals under question
The period of uncertainty has led to the following actions: a) sale of business assets in addition to the main ones (NBGI, Astaire), b) offering the minority stakes of subsidiary banks (Finansbank, Eurolife, Pangaea), c) sale of credit portfolio.
Most importantly, however, goals which have been achieved over the past two years or conditions for the rapid achievement of which have been created, are under question, taking into account the following:
- Deterioration of the net loans to deposits ratio.
- Increase in the cost of financing.
- Deterioration of the net interest margin due to a decline in the value of collateral and to resorting to the Emergency Liquidity Assistance ELA on a mass scale, combined with stagnation in terms of new lending.
- Increase in new bad loans, which slows down the pace of achieving the objective of reducing the percentage of estimates to less than 1% of assets.
- Delay in improving the return on capital.
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