Greek Banks Eagerly Await International Bailout

Jacob Harper  |

On Mar 27 a conglomerate of European financial authorities revealed they were committing some $11.4 billion USD to Greece to help spur the country’s still-stagnant economy. Greece needs all the help it can get, as early signs of a recovery last year have been hampered by a growing GDP shrink and the stench of still-lingering toxic loans on the country’s major financial institutions.

Greece’s major financial centers have struggled to shed themselves of much of the detritus associated with the global financial meltdown of 2008. As a means of trying to recover, the country has taken to both seeking international bailout while its major banks continue to figure out how to shed their mountains of leftover near-worthless assets.

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Concerning the latter, the country’s largest bank by assets, National Bank of Greece (NBG) , is working to create a “bad bank” to house the most toxic assets in a scheme similar to that enacted by Cyprus during their banking crisis a year prior. But shedding bad loans on the books is just half of it. To once again jumpstart a recovery, Greece needs outside capital to shore up the bank’s health.

Along with National Bank of Greece, the other “Big Four” banks of Greece – Piraeus, Alpha Bank, and Eurobank – have traded a surge at the end of last year with a retreat in early 2014. Promises of a Grecian turnaround have given way to economic contraction, with GDP slowing a full 6 percent in the fourth quarter of 2013.   

However, for a second time, whispers of a real end to the country’s major, yerars-long recession, might be materializing. In March National Bank of Greece claimed to have already begun leading a real recovery, insisting that contrary to widely held assumptions they would not need to sell equity to cover debts.

Regardless of whether Greece’s second run at a recovery will stick, foreign financial concerns that have been similarly affected by Greece’s second slowdown are ready to throw more money at them. The International Monetary Fund in particular has taken an interest in helping Greece recover, offering to extend a 3.6 billion euro ($4.968 billion USD) loan in the next recovery tranche. 

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