Greece plans stress testing for big banks

City A.M. Reporter
GREECE’S bank rescue fund will aim to sell Hellenic Postbank and Proton by mid-July with big banks continuing to absorb small lenders as part of plans to revive the battered sector, the country’s foreign lenders said in an inspection review.

Greece is recapitalising its four big banks and winding down others deemed non-viable to improve the sector’s capacity to fund the economy out of a deep six-year recession. Banks suffered heavy losses from debt writedowns and bad loans.

Small lenders Hellenic Postbank and Proton were split into good and bad parts and are now fully owned by the Hellenic Financial Stability Fund (HFSF), a state capital backstop funded with €50bn from the country’s bailout package.

The new tests will assess the adequacy of solvency buffers and loan-loss provisions as banks still face rising credit impairments because of the recession. Bad loans rose to 24.2 per cent of their books last year from 16.5 per cent in 2011.

The recapitalisation of Greece’s four core banks – National, Alpha, Piraeus and Eurobank – is expected to be wrapped up by 14 June.