ATHENS: Greece's central bank will review a study by BlackRock Solutions on the loan books of Greek lenders and determine what additional capital they will need by the end of next month, a Bank of Greece official said on Sunday.
Greek banks are trying to cope with rising credit impairments and a shrinking deposit base as the austerity-hit country struggles through its fifth straight year of economic contraction.
Banks are expected to have to recapitalise after write-downs resulting from a planned bond swap which calls for a 50 percent nominal write-down on their Greek government bond holdings and provisioning for non-performing loans.
"The study was handed to us on Friday. Its findings on the extra provisions for credit risk Greek banks will need to take will be assessed and announced by end-February," the official who did not want to be named told Reuters.
The economy's protracted slump, projected at about 6 percent last year, is taking a toll on loan portfolios as unemployment climbs to record highs 18.2 percent in October.
"The Bank of Greece will evaluate the study's findings versus provisions already booked by banks and their business plans to conclude what extra capital is needed," the official said.
Banks have been told by the central bank they will need to maintain a core Tier 1 capital adequacy ratio of 10 percent of risk-weighted assets this year while there is talk this may be relaxed to 9 percent, in line with European Banking Authority (EBA) guidelines. Lenders will have to submit their business plans for the 2011-13 periods next month and their capital raising plans by end-April to the central bank.
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