The position of Greek banks in relation to international banking crisis she is strong, she points out Goldman Sachsanswering customer questions about capitalindustry liquidity and investment portfolio.

Greek systemic banks significantly improved the overall capital level and CET1 capital ratio in 2022, averaging about 1.8% year-on-year, it notes. Index CET1 for the National Bank, Eurobank, Alfa Bank and Piraeus Bank were at 15.6%, 15.2%, 11.9% and 11.5% respectively, while the overall capital adequacy ratio was at 16.8%, 18.2%, 16.1% and 16.4% by the end of 2022, well above minimum supervisory requirements. At the same time, management estimates, as he points out, indicate a further improvement in capital adequacy by 100-150 bp. in 2023 and 250-350 b.p. until 2025, which is not based on new releases of AT1 or Tier 2 games.

especially for titles. AT1, which caused the most concern among investors internationally after the events in Credit Suisse, Goldman Sachs notes that the contribution of CET1 capital to the total capital of Greek banks in 2022 was about 80% with limited exposure to AT1 securities. Two Greek banks, Alpha Bank and Piraeus, had AT1 securities in their capital structure, which contributed 7% and 12% respectively to their overall capital adequacy ratio.

However, Goldman Sachs highlights that Greek banks are planning to issue older securities (Level 2 and above) that meet the Minimum Capital and Eligible Liabilities (MREL) requirement. In light of the recent market volatility around AT1 issues, he adds, the prices of most Greek banks’ senior preferred bonds have also been affected, with yields up about 60 basis points over the past two weeks (compared to a 160bp expansion, AT1 is underperforming) .

This, Goldman Sachs points out, could mean higher new bond issuance costs, at least temporarily, than the level of the past two weeks. However, as he points out, Greek banks expect Greece’s return to investment grade in the second half of 2023 could support bond prices and therefore reduce the cost of issuing new securities.

Increased liquidity

Goldman Sachs also emphasizes that Greek banks have a good level of liquidity, with the coverage ratio hovering well above 100% at an average of 198%, the loan-to-deposit ratio well below 100% at 67%, and the fixed funding ratio also well above 100% to 132% on average.