Regulation deals huge blow to NBG’s capital

The capital of National Bank of Greece will suffer an immediate impact from the obligation for a one-off payment of over 250 million euros due to the regulation passed by the government for the inclusion of pensioners of NBG’s auxiliary fund in the single auxiliary fund for all pensioners.

The regulation provides for National to pay an annual contribution of 50 million euros to the fund for at least five years.

This new obligation will have an impact of 70 basis points on the bank’s capital from this year and will reduce its capital adequacy ratio from 15.7 percent to 15 percent. This put into doubt the main parameters of the transformation plan NBG management recently presented to investors.

Sources familiar with the matter explain that the blow to NBG’s capital is the result of the cumulative provision for the entire obligation National must cover within 2019 as, according to International Financial Reporting Standards, it must immediately acknowledge the entire obligation, and not just the annual burden of 50 million euros the regulation provides for this year.

Therefore the bank’s projected profits are insufficient for the coverage of this loss, canceling the smooth implementation of National’s plan.