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The country's banks will post big losses for 2011 on Friday,
as they will include the writedown on government bonds suffered during
last month's bailout deal as well as provisions for higher bad loans due
to the recession.
The big four lenders – Alpha, Eurobank , National and Piraeus –
will treat losses from last month's bond swap to cut the country's
debts, part of a rescue package negotiated with the European Union and
International Monetary Fund, as if they took place last year.
The bond swap inflicted real losses of about 74 percent on
bondholders, wiping out 22bn euros of the banking system's 23.8bn in
core Tier 1 capital ratio, according to International Monetary Fund
estimates.
Banks, holders of about 45bn euros of government bonds, will likely
value the hit from the bond swap at its net present value because a
recapitalisation plan for the sector and accounting treatment issues
have not been finalised.
This is the reason most analysts would not give loss estimates.
Banks will report annual results after the Athens stock market closes at
4.30pm.
A previous March 31 deadline to report earnings was extended to
April 20 to give banks more time to assess the impact of the debt swap
and prepare their capital plans.
"It is difficult for us to come up with estimates as the precise
accounting treatment of the bond swap losses is not known," said analyst
Nick Koskoletos at Eurobank Equities.
Applying a 75 percent haircut on some 35.6bn euros of bond swap
eligible assets - Greek government bonds and state-guaranteed loans -
the pretax impairment for the four large banks may reach 26.7bn euros,
said Euroxx Securities analyst Manos Giakoumis in a note.
Banks will need to fill the resulting capital shortfall and meet a
core Tier 1 target of 9 percent by end-September demanded by the Bank of
Greece, the country's central bank.
On this front, banks have acted to boost their core capital,
including issuing preferred shares to the government, buying back hybrid
securities and selling foreign subsidiaries.
The government, which was due to announce a framework to
recapitalise banks on Friday, is still working on technical aspects of
the scheme with EU/IMF officials, the country's prime minister told an
economic conference on Friday.
"The completion of this procedure and the restructuring of the
banking system will create new favourable conditions for the financing
of the Greek economy and in particular of small and medium size
companies," Prime Minister Lucas Papademos said.
With the economy mired in recession and unemployment at a record
21.8 percent, asset quality will have deteriorated, meaning banks'
non-performing loans are certain to rise from 14.7 percent of their
books at the end of the third quarter.
Banks are unlikely to spell out capital plans to address the
shortfall while the government is still working on the structure of the
recapitalisation plan, largely funded by the Hellenic Financial
Stability Fund (HFSF).
On Thursday, the fund received 25bn euros of European Financial
Stability Facility (EFSF) floating rate notes and has been cleared to
provide letters of commitment to banks that it will underwrite their
capital needs.
About 50bn euros have been earmarked in Greece's second bailout to prop up the banking sector.
"Without this support, the banking system can't operate smoothly," Papademos said. (Reuters)
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Samstag, 21. April 2012
Banks to show pain of bond swap, bad loans
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