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November 4, 2015 | Greek Banks’ Non-Performing Loans Hit 43%; Only €14 Billion Recapitalization Needed?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Only €14 Billion Recapitalization Needed?

On November 1, I noted Greek Banks Need €14 Billion Recapitalization Following Latest Stress-Free Tests.

My comment was “Greek banks did much better than expected in the latest ECB stress test (undoubtedly stress-free). The ECB’s adverse scenario shows Greek banks only underfunded to the tune of €14 billion.

Greek Banks’ Non-Performing Loans Hit 43%

Reader Lars from Norway just emailed regarding recent interview in Germany with former Greek finance minister Yanis Varoufakis that strongly suggests that €14 billion recapitalization number is pure fantasy.

Lars writes …

Hello Mish.

In a October 28th event in Munchen, Yanis Varoufakis and Hans-Werner Sinn, Professor of Economics and Public Finance at the University of Munich, discuss the Greek tragedy.

It is interesting because Varoufakis gives a very frank description of what went on behind the scenes. In short the Troika wanted Greece on its knees.

Varoufakis stated that Greek banks are suffering with is 43% nonperforming loans.

Alpha Bank alone has assets of €70 billion of which loans are €47 billion. Alpha Bank only has €7 billion in capital. So if 43% of the €47 billion is nonperforming, then nonperforming loans would be about €20 billion.

And that’s just one bank. How can a €14 billion capital injection be enough?

I recommend you to listen to the video (2 hours) because it gives a chilling description of what happens when the Troika rules Europe.

I don’t agree with everything Varoufakis proposes. I find Sinn more level headed. But you get frank speaking from both. There are also some tough questions from the audience in Munich.

Lars

Here is a link to the video: The Situation in Greece and the Future of Europe

Mike “Mish” Shedlock

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November 4th, 2015

Posted In: Mish Talk

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