SURPRISE: ECB Stress Tests Reveal Greek Banks Need Money

Just when you though the Greek boogeymen were tucked away, locked in the closet: they reemerge with a fresh appetite for some new, cold, hard, cash.

“The keys to voluntary investor participation in the capital raises will be clarity regarding the ultimate capital structure and the extent of the government’s participation in the governance of the banks,” Ross, chairman of WL Ross & Co. said after the release of the ECB’s so-called comprehensive assessment for Greek lenders on Saturday. “Investors will not be comfortable with committing new equity capital to banks that are effectively nationalized,” the billionaire investor, who holds a stake at Eurobank Ergasias SA, said.

The ECB asset-quality review identified 9.2 billion euros of valuation adjustments for National Bank of Greece SA, Piraeus Bank SA, Eurobank and Alpha Bank AE, the Frankfurt-based supervisor said Saturday. The banks’ capital gap amounted to 14.4 billion euros under a simulated stress test scenario, and 4.4 billion euros under baseline macroeconomic assumptions. The four banks will have to submit recapitalization plans to the ECB’s supervisory arm by Nov. 6.
“Raising funds will clearly be difficult,” Arturo Bris, a finance professor at IMD business school IB Lausanne, said in a phone interview Sunday. “A solution can be a government-sponsored plan that takes care of the bad part of the banking system, while the good part becomes marketable.”

Under European stress tests, apparently all of the Greek banks are without proper funding.

So, how many of you are interested in some Greek bank bonds?

Anyone?