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The results of the BlackRock audit are in the hands of the Bank of Greece

13 January 2012 / 16:01:49  GRReporter
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The audit of the Greek banks is over and BlackRock submitted the report on the status of the Greek financial system to the Bank of Greece at the end of this week. The conclusions of financial analysts from the international giant will serve the supervisory Troika and the Bank of Greece to determine the remedial actions necessary to be taken for each bank separately. The study makes an in-depth analysis of the development of problem bank loans for a period of three years. The Bank of Greece is expected to process the data in late January and give its directions for the necessary structural changes in each of the financial institutions in the country.

In the worst-case scenario, banks will have to recapitalize up to 17 billion euro by the middle of the year to resist the weak economy and a recession of 6.5%. Sources from the central bank in the country indicate that the cut on the debt held by private creditors (PSI) would not affect the healing process and the writing of "bad" loans off the banks' balance sheets. In order banking institutions in the country to be considered sustainable, the capital adequacy ratio Core Tier 1 should be 10%. Sources from the Greek central bank cited by To Vima state that Greece would try to gain a lower level of 9% for Core Tier 1. If this happens, the need for recapitalization of the Greek financial system will fall significantly and it may not be necessary to seek another more than three billion euro plus.

If banks are not able to raise capital alone, they will have the opportunity to turn to the Fund for Financial Support, which under the current legislation will acquire shares of the troubled bank in return. BlackRock reports that PSI will thin out the shareholders in the banking system, which seriously concerns mainly Greek bankers. They insist on finding a solution by compromise, which will allow shareholders not to lose their property as a result of the external debt haircut. Bankers warn that there is a real risk for the government to acquire a majority stake in local banks and to manage them, which does not win the confidence of the private sector.
Meanwhile, the negotiations on PSI continue in Athens and the Ministry of Finance has issued a statement: "We are on the right track." Greek media interpreted the signals from the meeting between the Greek Government and the Head of the Institute of International Finance (IIF) Charles Dallara as  "reservedly positive". Kathimerini reports that Dallara insists that the interest rate on new bonds should exceed 5%, and the Greek government prefers to keep it closer to 4%. Immerisia states that the negotiations for the exchange of Greek government bonds have a positive impact on the domestic market and the main indicator of the Athens Stock Exchange has jumped from 1.23%. Even banks’ shares have risen by 3.51% compared to Thursday. "The arrival of the head of the Institute of International Finance Charles Dallara in Greece and the expectations for a quick solution in the negotiations on the Greek PSI improves the climate for the Greek banking system. We can expect another positive meeting today," reads the morning announcement of Piraeus.

Tags: EconomyMarketsCompaniesPSIBlackRockBank of Greece
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