ECB stress tests show capital shortfall of 14.4 bln euros in 4 Greek banks

Greece's four systemic banks need further capital boost of 14.4 billion euros (15.9 billion U.S. dollars), the European Central Bank (ECB) announced on Saturday after conducting a balance-sheet assessment and stress tests.

Overall, the stress tests identified a capital shortfall across the four participating banks of 4.4 billion euros under the baseline scenario and 14.4 billion euros under the adverse scenario.

According to the ECB stress test, Piraeus Bank has the biggest capital need of 4.9 billion euros and the National Bank of Greece comes second with 4.7 billion. In the third position is Alpha Bank with 2.7 billion euros followed by the Eurobank with 2.1 billion euros.

The four banks will have to submit capital plans to ECB Banking Supervision explaining how they intend to cover their shortfalls by Nov. 6. This will start a recapitalization process under the economic adjustment program that must conclude before the end of the year.

"Covering the shortfalls will improve the resilience of the banks' balance sheets and their capacity to withstand potential adverse macroeconomic shocks," the ECB said in its statement.

The results come as Greek parliament is going to vote a bank recapitalization bill that defines how fresh funds will be pumped into its ailing banks to shore up their capital base.

Under the country's third bailout agreement reached in mid-July, Greece is set to receive up to 25 billion euros of international funds to recapitalize its banks, three of which are majority-owned by Greece's Hellenic Financial Stability Fund (HFSF).

HFSF was supported with dozens of billions of euros by creditors since 2010 to recapitalize Greece's ailing banks and strengthen the banking sector as part of efforts to address the threat of default and pave the way to exit from the crisis. Endit