19/08/2015 13:30
Greek banks appear to be the primary victims of the developments in Greece as their stock prices deteriorate almost on a daily basis.
The third memorandum recently agreed between Greece and the European institutions and voted by the Greek parliament and welcomed by the Eurogroup last week, seems to be a convincing development for the markets to stop speculation about a possible Grexit at least for the time being.
But, even though the memorandum allows for the extension of up to €25 bn for the banking sector, the focus is on at what extend the needed amount for recapitalising the sector to be determined by the stress tests to take place shortly, is going to be undertaken by the banks' stakeholders (bail-in) rather than by outside funds (bail-out).
Naturally, the first category to feel the pressure is the banks' shareholders as all these uncertainties and possible negative scenarios are immediately reflected on the companies' share prices.
The prices of the shares of the four Greek systemic banks have literally collapsed after the re-opening of the Athens stock exchange after about a month of closure, and despite a four day relief rally at the beginning of last week, substantial declines resurfaced this week.
As a result the capitalization of the Greek systemic banks has dropped to up to two months ago un-thought levels with that of TPEIR and EUROB trading at new lows.
It is characteristic that BOCY which has not been so much negatively affected by the developments in Greece, has a bigger capitalization than that of all the Greek systemic banks but ETE. A 10% further decline in ETE's price, assuming BOCY stays at the current levels, will make even ETE's valuation lower than Bank of Cyprus'.
The banks' bondholders also suffer considerably being the next category in line to be bailed in as explicitly expressed by the Eurogroup's announcement.
The prices of the bank bonds as well, suffered since Monday severe declines.
The third memorandum recently agreed between Greece and the European institutions and voted by the Greek parliament and welcomed by the Eurogroup last week, seems to be a convincing development for the markets to stop speculation about a possible Grexit at least for the time being.
But, even though the memorandum allows for the extension of up to €25 bn for the banking sector, the focus is on at what extend the needed amount for recapitalising the sector to be determined by the stress tests to take place shortly, is going to be undertaken by the banks' stakeholders (bail-in) rather than by outside funds (bail-out).Naturally, the first category to feel the pressure is the banks' shareholders as all these uncertainties and possible negative scenarios are immediately reflected on the companies' share prices.
The prices of the shares of the four Greek systemic banks have literally collapsed after the re-opening of the Athens stock exchange after about a month of closure, and despite a four day relief rally at the beginning of last week, substantial declines resurfaced this week.
As a result the capitalization of the Greek systemic banks has dropped to up to two months ago un-thought levels with that of TPEIR and EUROB trading at new lows.
It is characteristic that BOCY which has not been so much negatively affected by the developments in Greece, has a bigger capitalization than that of all the Greek systemic banks but ETE. A 10% further decline in ETE's price, assuming BOCY stays at the current levels, will make even ETE's valuation lower than Bank of Cyprus'.
The banks' bondholders also suffer considerably being the next category in line to be bailed in as explicitly expressed by the Eurogroup's announcement.
The prices of the bank bonds as well, suffered since Monday severe declines.