ATHENS, March 22 An "unduly conservative"
approach in stress tests on Greece's major banks would have
scared off investors, the head of Greece's central bank said on
Saturday, adding that he believed the results would be close to
EU-wide tests due later this year.
The banks' capital needs were a sticking point in the latest
bailout review by Greece's lenders, which ended this week after
six months of wrangling.
The EU and IMF, which had estimated that the banks' needs
would be higher, said in a statement that there were "upside
risks" to the Greek estimates and urged the banks to address the
high level of non-performing loans.
But in an interview to be published in Sunday's Kathimerini
newspaper, George Provopoulos was quoted as saying: "If were
unduly conservative and imposed an overcapitalisation of the
banks, we would run two serious risks.
"First, we would shake the trust of depositors, who would
say, rightly, that for the banks to need a new big capital
boost, they must be weak.
"The second danger would be that private investors who
placed money in the capital increases of banks as part of last
summer's recapitalisation would lose any confidence in the
country and its banking system."
Greece's four big lenders - National Bank, Piraeus
Bank, Eurobank and Alpha Bank
-were recapitalised last year to the tune of 28 billion euros
This month's Bank of Greece health check, intended to
establish whether they had enough capital to withstand rising
bad loans, a further economic slump and other shocks, found that
they needed to raise an extra 6.4 billion euros.
Greece's bank rescue fund, the HFSF, which recapitalised the
banks last summer, has a remaining buffer of about 8 billion to
9 billion euros to address any additional needs.
The European Central Bank is due to carry out its own
EU-wide health check later this year, and Provopoulos said he
believed the results would be "close to ours".
($1 = 0.7256 Euros)
(Reporting by Karolina Tagaris; Editing by Kevin Liffey)