Bank optimism after stress test scenarios

Greek banks responded positively on Wednesday to the macroeconomic parameters against which they will be assessed in their upcoming stress tests.

Senior bank officials told Kathimerini that the scenarios prepared by the European Banking Authority are relatively mild and considerably more favorable than those in the stress test they underwent in 2015. However, they also noted that this does not mean the tests will be a walk in the park.

The same sources argue that the methodology of the exercise as well as other technical issues could lead to considerably higher capital requirements.

The most pessimistic parameter in the EBA’s adverse scenario concerns real estate prices, a crucial area for banks given that properties comprise the collateral for most loans. This scenario provides for a drop of some 17.5 percent in the prices of residential and commercial properties.

The announcement of the parameters met with such great enthusiasm that the Greek stock market’s banks index soared on Wednesday. Bank officials make no secret of their optimism that the test result will be manageable, and that even if there are some capital requirements stemming from it they will be covered by the market.