Probable Impact on Greek banks of a Grexit
- · Greek banks may not gain access to wholesale markets soon.
- · They cannot tap market funding.
- · Funding mismatches will occur. Asset Liability Mismatches of a severe nature.
- · Re-pricing loans will have a higher risk premium attached.
- · Pre-provisioning operating profs will fall.
- · There cannot be any lower funding costs as risk premium impacts.
- · Net Interest Income will fall.
- · Non- interest income like fees and commissions will fall following business failures.
- · The reversion to crisis will result in business failures which will impact bank profitability through spurt in NPAs and enhanced provisioning needs. The deterioration of asset quality will accelerate. The accumulation of non-performing loans will increase.
- · Banks may not be able to extend new credit,
- · Bank incomes will fall
- · As capital is eroded, new capital will be called for by the Bank of Greece for loan-loss provisions. As there is a dearth of capital, banks' capital adequacy will fall.
- · There will be a systemic instability.
- · Deposits outflows are already estimated at $ 2 billion a week. Private sector apprehensions and anxieties might see a run on the banks.
- · Currency mismatches of a serious nature.
- · A cash out situation.
Views expressed without any risk or responsibility
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