Banks keep books open, fret over talks

14 November 2015
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Banks and the local market in general are sweating over the government’s negotiations with its creditors this weekend as the outcome will to a large extent determine the course of the credit sector’s recapitalization. All are hoping for a positive statement that will lead to the release of eurozone funding to Greece.

Investors’ concerns have grown over the last few days as it was seen as a bad sign that there are so many issues which remain pending in the talks and are delaying the payment to Athens of the 2 billion euros in bailout funds and the 10 billion euros for the recap.

While the banks’ original planning had provided for the share capital increases to have already been completed, the books of all four main lenders (National, Piraeus, Alpha and Eurobank) will remain open at least up until Tuesday. Should there be any further delays, it is possible that the books will not be closed before the end of next week.

Bank officials have noted to Kathimerini that there is strong investor interest, but a large number of these have set the completion of the negotiations before they commit their funds as a condition. The same officials acknowledge that the linking of political developments with financial developments is again creating pressure, while adding that the enthusiasm seen some two weeks ago has now dissipated.

If all goes well and there is some sort of an agreement between Athens and the creditors during the weekend, a Euro Working Group conference call will follow that will likely issue its approval for the disbursement of the overdue bailout tranche of 2 billion euros and of the 10 billion euros of recap cash that is currently locked in a European Stability Mechanism (ESM) account. Bank officials say that if that happens there will be a great response by investors and a large part of the funds the banks are seeking will be covered rapidly, with the books closing as early as on Monday.

However, if the government and the creditors fail to agree on all the details and the uncertainty is prolonged, then the recap project will be put at serious risk and there will be a strong chance that some of the banks will have to be exclusively recapitalized by the state – provided the ESM funds are eventually released.

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