Greece’s 4 systemic banks eyeing capital sources in crucial 2022-25 period

Having emerged from a decade of unprecedented crisis, punctuated by three recapitalizations, Greece’s systemic banks are now focusing on the 2022-2025 period, which is deemed just a crucial for the domestic economy as the previous two-year post-bailout era.

The emphasis is on guaranteeing permanent sources of liquidity and capital infusions from the markets.

Among others, Greece’s share of an EU post-Covid recovery package is estimated at above 30 billion euros, with the country’s four systemic banks figuring in the economic picture, whereas stepped up pressure exist for banks to boost their financing of the recovering Greek economy with capital.

One threshold recently passed was a successful share capital increase by Piraeus Bank, in tandem with credit upgrades of both Greece and systemic banks by S&P.

At the same time, Greek banks but maintain a minimum amount of equity and subordinated debt to support an effective resolution (MREL).

Supervisory authorities now point to a goal of capital sources exceeding 25 percent of risk-weighted assets by 2025, so as to protect depositors from a risk of “haircut”, and the state from the specter of another bank bailout.

On its part, the Bank of Greece, the country’s central bank, considers that the four systemic banking groups in the country – Alpha Bank, Eurobank, National Bank and Piraeus Bank – must cover a distance of 10 billion euros to achieve an optimization of their capital structure.

In any case, the issuance of new security will depend on demand by the international and domestic community.

Last week, Eurobank completed its first senior preferred bond issuance since 2017, at a level of 500 million euros and with a low yield.

The goal by the bank’s management is within 2021 to float another such issue, with similar initiatives in 2022-23.

Piraeus Bank is eyeing Tier1 securities of 600 million euros.

National Bank recently issued a senior preferred green bond – the first in the Greek market – worth 500 million euros.