The turmoil in the banking sector is also hitting Greek institutions. Greek banks seem well armed - but have a serious weakness.
As recently as mid-2015, the Greek financial system was on the verge of collapse. The turmoil in the European banking sector is now raising new concerns that Greek institutions will once again face major problems.
'Greek banks are more resilient than they were a few years ago and are better cushioned to absorb the impact of a financial crisis',
The Greek central bank chief adds: 'They have also returned to profitability in 2022 and improved their capital adequacy to a level above regulatory requirements'. The exposure is 'close to zero', according to
Indeed, the four systemic Greek financial institutions have largely recovered from the turmoil of the 2010-2018 crisis years. They have reduced the ratio of non-performing loans, which reached almost 50% of total outstanding loans in
Today, oustanding loans of
So far, there are no signs of a bank run like the one
Fearing a Grexit,
By comparison, serenity now reigns in the boardrooms of
Finance Minister
As a result of the Greek sovereign debt crisis, however, the banking sector is still struggling with a structural problem. Write-offs of bad loans have eaten up a lot of equity in recent years.
With a core capital ratio (Tier 1) of 13.2%, Greek banks do meet the minimum requirements. But 63% of prudential own funds is accounted for by deferred tax credits from loss carryforwards. In this way, the state compensated the banks in 2012 for the losses from the haircut.
In order to enhance their capital adequacy, banks are now refraining from paying dividends in 2022, despite billions in profits. In its latest Financial Stability Review, the
Central bank governor Stournaras, however, sees the banks on a good path in strengthening their capitalisation: 'Going forward, the convergence of asset quality with the EU average, the improvement of quality and supply of capital, and the sustainability of earnings due to business growth will further strengthen the fundamentals of Greek credit institutions', the central bank governor predicts.
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