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Capital Intelligence Downgrades 5 Major Greek Banks

Capital Intelligence Downgrades 5 Major Greek Banks

International rating agency Capital Intelligence (CI) has announced its downgrade of a total of five major Greek lenders. These are Attica Bank, Alpha Bank, National Bank of Greece, Piraeus Bank and Eurobank Ergasias.

 

Attica Bank

CI has lowered Attica Bank’s Financial Strength Rating (FSR) to ‘C-’ from ‘B’.  Financial Strength Ratings in the ’C’ range denote a very weak financial condition, immediate problems and limited capacity to withstand adversities – as well as a highly volatile operating environment. 

The Outlook on the FSR is maintained at ‘Negative’, reflecting the downward bias to all credit metrics and in particular the low likelihood that the Bank will be able to raise additional capital within the next 12 months. 

Although the majority shareholder had committed to cover its share of the €433 million common share capital increase, if it were to do so by drawing on existing deposits there would be no benefit in terms of liquidity.    

The FSR primarily reflects the Bank’s weak capital base and difficulty to raise the additional capital required in the current environment. 

With end-March 2015 total assets of EUR 3.8 billion, ATB remains one of the few independent banks in Greece and aims to consolidate its position as a medium sized bank within the new banking sector landscape. ATB was the only Greek bank to have concluded a capital increase without any support from the Hellenic Financial Stability Fund (HFSF) in 2013.  

 

Alpha Bank

The rating agency has lowered Alpha Bank’s (AB) Financial Strength Rating (FSR) to ‘C+’ from ‘B’. Financial Strength Ratings in the ’C’ range denote a very weak financial condition, immediate problems and limited capacity to withstand adversities, as well as a highly volatile operating environment.

The Outlook on the FSR is maintained at ‘Negative’, reflecting the grim outlook on the economy even if a complete economic collapse is avoided – and particularly the long lasting effects on loan asset quality, as well as the overall downward bias of risks. 

The FSR reflects the severe impact of the Greek sovereign crisis on the Bank’s intrinsic financial condition, particularly its deposit base and its vulnerability in case a currency redenomination takes place as Greece is either obliged by events or chooses to abandon the Euro.  

AB maintains a leading position as one of the four systemic banks in the Greek market. The total asset base was €73 billion at end-March 2015.  AB was amongst the first Greek banks to initiate its regional expansion into SE Europe and has an established regional network which operates under the Alpha Bank brand name in a number of countries including Cyprus, Romania and Bulgaria.

 

National Bank of Greece

CI has lowered National Bank of Greece’s (NBG) Financial Strength Rating (FSR) to ‘C+’ from ‘B’. FSRs in the ‘C’ range denote a very weak financial condition, immediate problems and limited capacity to withstand adversities, as well as the highly volatile operating environment. 

The Outlook on the FSR is maintained ‘Negative’ reflecting the balance of risks. 

The FSR reflects the severe impact of the Greek sovereign crisis on the Bank’s operating environment and its vulnerability in case a currency redenomination takes place as Greece is either obliged by events or chooses to abandon the Euro. 

With end Q1 2015 total assets of €119 billion, NBG occupies a leading and systemic position following the consolidation of the Greek banking sector. The Hellenic Financial Stability Fund (HFSF) held 57.2% of NBG’s common share capital. International institutional investors held 35% of the Bank’s share capital, other than that held by HFSF, while domestic retail investors held 5%. Warrants to acquire the shares of the HFSF are mainly held by foreign institutional investors.

 

Piraeus Bank

The international credit rating agency has lowered Piraeus Bank’s (BoP) Financial Strength Rating (FSR) to ‘C’ from ‘B’. FSRs in the ‘C’ range denote a very weak financial condition, immediate problems and limited capacity to withstand adversities, as well as the highly volatile operating environment. 

The Outlook on the FSR is maintained ‘Negative’ reflecting the downward bias of risks. 

The FSR reflects the severe impact of the Greek sovereign crisis on the Bank’s intrinsic financial condition, particularly its deposit base and its vulnerability in case a currency redenomination takes place as Greece is either obliged by events or chooses to abandon the Euro. 

With end-March 2015 total assets of €89 billion, BoP group is the largest banking franchise in Greece in terms of its market share of loans, customer deposits and branch network. At end-March 2015, the Hellenic Financial Stability Fund held 67% of BoP’s share capital, while 33% was held by private shareholders, of which 28% were foreign institutional investors and 5% were individuals. 

 

Eurobank Ergasias

CI has lowered Eurobank Ergasias’ (EE) Financial Strength Rating (FSR) to ‘C’ from ‘B’. FSRs in the ‘C’ range denote a very weak financial condition, immediate problems and limited capacity to withstand adversities, as well as the highly volatile operating environment. 

The Outlook on the FSR is maintained ‘Negative’ reflecting the downward pressure on the rating and the bias of risks.

The FSR reflects the severe impact of the Greek sovereign crisis on the Bank’s intrinsic financial condition, particularly its deposit base and its vulnerability in case a currency redenomination takes place as Greece is either obliged by events or chooses to abandon the Euro. 

With end Q1 2015 total assets of €78 billion, EE remains one of the four systemic Greek banks following consolidation of the Greek banking sector. In April 2014, EE successfully completed a €2,864 million increase of its common share capital following which the Hellenic Financial Stability Fund’s share of capital was reduced to 35.4%. 

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