Banks urged to return €1bn to Greece as profits surge after years of state support

After a fundamental support from the Greek state and Greek taxpayers. Greek banks in difficult times have done very little for Greece.
First of all, let us clarify what we mean.

1) The banks suffered a huge loss from the Greek bonds they held in their portfolios in the haircut of the bond restructuring of 2012.
They had government bonds of 51 billion euros and were cut by 74% so they lost 37.7 billion euros.
The banks did not sell – they could not sell for two reasons
A) Because they would send the message that they are selling off Greece and are not supporting the country in difficult times.
B) Because they simply could not sell because no one was buying Greek debt.
Of course they could have not held Greek debt, they had invested a lot of capital in Greek bonds as they had high yields.
And Andreas Vgenopoulos with Marfin Popular Bank had large exposure to Greek debt and nevertheless the insidious Cypriot state attempted to accuse him.
The purpose was to rescue the Greek banks from 19 banks only 7 to 8 banks remained and at the same time to rescue the French, German and Italian ones that held Greek debt.

2) For this loss suffered by Greek banks where they became capital insolvent they received state support through 3 memoranda.
The collapse of the economy resulted in a surge in unemployment which in turn caused a crash in the loan portfolios of the banks. non performing exposures reached 94 billion euros – they had reached a maximum of 106 billion euros –
The NPEs were created mainly because the economy collapsed and because the lending criteria were... loose... so part of the failure in NPEs also burdens the banks with their business models.

3) Greek banks received 54 billion in recapitalizations and funding gap from the split good and bad banks with capital reaching 38 billion and the coverage of the funding gap 16 billion euros.
They received support of 17.5 billion from the deferred tax asset. which has now been reduced to 11 billion euros.
It is wrongly stated that banks do not pay tax, they pay tax but at the same time offset the proportion of 22% of the tax rate on their capital.
For example, if a bank has pre tax profits of 1 billion euros it will pay 220 million euros tax. on this 22% the deferred tax asset is offset on the banks’ capital converting the tax obligation into capital.
They also received state guarantees of approximately 18.5 billion euros due to the Hercules law and the securitizations for the main bonds senior bond that they issued.
State guarantees are not direct capital but indirect.
In total Greek banks received 54 billion + 17.5 billion + 18.5 billion = 90 billion state support.

Support of 1 billion euros from Greek banks to the economy is required

Greek banks achieve profits of 4.5 billion euros annually and in the period 2025 to 2028 they will record profits of 18.5 to 19 billion euros.
Obviously we are supporters of strong banks and their current picture is very good, we have strong banks, with strong capital and shareholders who produce strong returns.
We also have good managements that delivered results. so the time has come for interventions. so that banks have a strong social reference.
Greek banks therefore must give more, we do not consider their contribution sufficient and it is not sufficient.
We do not like that when banks are pressured by the government or politicians. they remember their social role. and we also do not consider it appropriate that they suddenly all appear together after some intervention.
Banks must give 1 billion in some way to Greece as a social dividend which means that 1 billion corresponds to 5% of the profits of the four year period 2025 to 2028.

Moral conclusion

This is the third time we write it the smart ones got the message. some ask what BN writes and some others say we simply do nothing.
Pay attention. so that you do not receive a bill of 2.5 billion euros. instead of 1 billion in the four year period. 2025 to 2028

Footnote

The interventions so far by Greek banks in fees or in deposit accounts fall within the sphere of “insignificance”.

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