Bloomberg
July 15, 2011
EFG Eurobank Ergasias SA (EUROB), Greece’s second-biggest bank, and Agricultural Bank of Greece (ATE) SA failed European Union stress tests after regulators found the lenders had insufficient capital.
Eurobank’s core Tier 1 capital ratio, a measure of financial strength, was 4.9 percent in the test’s adverse scenario, missing the 5 percent minimum required by the European Banking Authority, the Athens-based bank said in a statement today. Eurobank needs 58 million euros ($82 million) to meet the capital target, according to the statement.
Agricultural, known as ATEbank, failed the tests for a second year running, and said it needs 713 million euros to meet the 5 percent Core Tier 1 capital benchmark. The bank’s 7.85 billion euros of Greek sovereign bonds and loans helped explain its failure to meet targets, it said.
They were among eight banks that failed stress tests with a combined capital shortfall of 2.5 billion euros ($3.5 billion), including one in Austria and five in Spain, far less than predicted by analysts and investors.
The EBA’s attempt to bolster confidence in the industry has been criticized by analysts for excluding a possible Greek default. This year’s tests included a 25 percent writedown on Greek government bonds.
ATEbank said provisions of 750 million euros and a planned convertible bond for 235 million euros would help make up the shortfall. Eurobank said yesterday that it may sell a controlling stake in its Turkish unit, Eurobank Tekfen, to boost liquidity and capital.
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