Daniel Nouy, the head of the Supervisory Board of the European Central Bank (ECB), said she believed Greek banks won’t need further recapitalization after the last round of funding provided them with 14.4 billion euros ($16.21 billion). She made the comments in an interview with Greek weekly Agora Saturday.
“The capital plans have been fulfilled, so there is no need for additional capital requirements. We are in good shape in that respect,” Nouy said.
Greek banks would be excluded from ECB’s stress tests this year since they had already gone through “rigorous” health check last year, Nouy said, adding that the biggest challenges for Greek banks going forward were exposure to bad loans and the risk to profitability because of the low interest rates.
The ECB carried out an asset-quality review and stress tests of the four biggest Greek banks in October, after they were buffeted by political instability, a loss of deposits and imposition of capital controls in July.
Nouy also called on banks to use “all available tools” to tackle bad loans, including selling them. “All possibilities should be examined as we have a wide variety of situations,” she said.
Last year, the Greek government pledged to implement significant tax reforms, privatization and unpopular austerity measures in exchange for the much-needed funds. Since then, Athens has implemented a number of reforms, but faces creditor pressure to adopt further measures, such as streamlining home loan foreclosures and handling tax evasion.