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50% Greek Writedown?

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October 26, 2011 – Comments (2) | RELATED TICKERS: NBG

What effect would it have on NBG which I believe holds about 9 Billion Euro?  They wrote down a measly 1.645 Billion last quarter....what happens if they write down another 3.6775 Billion this coming quarter? 

Their liquidity ratios were prety healthy I around 11.2% for Tier 1 capital, even using the stress tests they came down to 7.7% which exceeds the 5% benchmark set the EBA....but it kinda makes me wonder if a 50% haircut of those bonds was factored into the extreme stress test?  What if there is a run on the deposits and higher than normal default rate on those buisness loans...the Greek public is not exactly happy with the Government at this time.

It's going to be very intresting to see what happens over the next couple of months. 

 

 

2 Comments – Post Your Own

#1) On October 26, 2011 at 4:56 PM, griderX (95.91) wrote:

Intresting notes from today's meetings:

http://finance.yahoo.com/news/EU-sets-new-bank-rules-apf-3214664161.html?x=0&sec=topStories&pos=1&asset=&ccode

By the end of June, the banks will need to have a core Tier 1 capital ratio of at least 9 percent, Rostowski said in a news conference after the 10 EU countries that don't use the euro left their colleagues to sort out the other problems. The core Tier 1 ratio measures how much good capital a bank holds compared with its risky investments.

The new capital threshold is much higher than the 5 percent capital ratio the banks had to prove in stress tests carried out just this summer.

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#2) On October 26, 2011 at 4:59 PM, griderX (95.91) wrote:

Forgot to add an important note:

 On top of that, the new rules will require banks to fully account for all sovereign debt they hold. The banks' capital levels will be calculated only after they mark down the government bonds. In the July tests, they had been allowed to assume that at least some of the bonds from struggling countries would be paid in full.

Guess that answers my question about valuation of Greek debt during those stress tests....this will surely paint a bleeker picture!

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