National Bank of Greece (ADR): Rescue In Sight For Greek Banks
Greek banks to be rescued by the market and the HFSF
National Bank of Greece (ADR): Rescue In Sight For Greek Banks
By: Troy Kuhn
Published: Oct 23, 2015 at 9:28 am Est
NBG
As debt-ridden Greece draws closer to unlocking further funds from its third bailout package. The crucial bailout review having started earlier this week, is bringing in significant advancements for Greek banks. According to Reuters, inside sources reported that Greek banks could turn to private investors to fulfill any capital shortfalls that may occur. These shortfalls will be affirmed by the European Central Bank’s asset quality review and baseline stress tests.
Greece’s international creditors, the European Central Bank (ECB), the International Monetary Fund (IMF) and representatives from the Eurozone arrived in Athens earlier this week to commence the long-awaited bailout review. The bailout review is essentially an assessment of how well economic reforms demanded by international creditors are being implemented and absorbed into Greece’s economic framework. Depending on how well Greece scores, the country will be able to extract further funds from its third bailout package. These funds are crucial to keep the country’s banking sector afloat.
Additionally, the ECB is also reviewing capital shortfalls and the overall state of Greek banks. Given that private investors and the market cannot suffice Greek banks’ capital shortfalls, the banks will then tap Greece’s bank bailout fund. The fund is called the Hellenic Financial Stability Fund (HFSF). However, this depends on ECB’s assessment of Greek banks.
Read Also:National Bank of Greece (ADR): Crucial Months Ahead
Greek banks have been subject to acute uncertainty as a result of the debt crisis. As the Greek debt crisis accelerated and gained momentum, depositors scurried to eject their savings and shield them from the ongoing uncertainty in the country. Moreover, Greek banking stocks have lost a majority of their market cap as a result of turbulent times in the country. National Bank of Greece (ADR) (NYSE:NBG), the country’s largest bank, based on the number of assets it holds has eroded more than 95% market cap in nearly five years. Other key banks, such as Alpha Bank, Eurobank and Piraeus Bank have undergone similar volatility.
Currently, ECB’s single supervisory mechanism (SSM) is reviewing the capital status of the aforementioned banks. The results are scheduled to be announced by the end of this month.
According to the bailout terms highlighted by Greece’s third bailout package, the country is due to receive as much as 25 billion euros to recapitalize its banks. Given the dried up reserves of these banks, recapitalization is crucial to keep the sector afloat and operational.
Meanwhile, Greece is currently in the process of revamping its economic policy in a bid to meet austere targets placed by its international creditors. The economy is steadily moving out of uncertainty, albeit at a painfully slow pace. A lot of the economic reforms that were scheduled to be implemented by mid-October remain untapped.
However, a significant breather came in the form of Greek finance ministers’ statements that surfaced earlier on Wednesday. Experts had previously voiced concerns that the imposition of capital controls earlier this summer could prove disastrous for the economy. But, Greece’s finance minister confirmed yesterday that the damage from capital controls was negligible and significantly less compared to what was feared earlier. Capital controls are essentially limitations placed on the total amount of money a depositor can withdraw from his account. If restrictions are placed on this amount, the economy undergoes a significant downward pull on the back of muted economic activity. Finance minister Euclid Tsakalotos further ensured that there was a significant portion of economic growth potential left untapped and worthy of notice from the consensus. The minister further added that the impact of capital controls placed over the summer would surface during the third and fourth quarters of the year 2015.
National Bank of Greece stock is down more than 5% at $0.89 in pre-market trading today as of 08:34 AM EDT.
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NASDAQ DIP and RIP
Here is the best word that describes what i do here.
Intuitive;
means having the ability to understand or know something without any direct evidence or reasoning process.
I was born with it, I'm truly blessed!
Alway's searching for winners'
