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S&P raises credit ratings on Greek banks

S&P Global Ratings on Tuesday raised its long and short term issuer credit ratings on four Greek banks, Alpha Bank, Eurobank Ergasias, National Bank of Greece, and Piraeus Bank to 'B-/B' from 'CCC+/C' and said the outlook on them is stable.

In an announcement, S&P said at the same time it raised the issue ratings on the banks' subordinated debt to 'CCC' from 'CC', affirmed the rating on Alpha Bank's preferred shares at 'D' and also assigned 'B-/B' long- and short-term resolution counterparty ratings (RCRs) to Alpha, Eurobank, NBG, and Piraeus.
The upgrades follow Greece successfully completing the fourth review of the ESM program and our expectation that the sovereign will exit the program in August 2018. "The upgrades also reflect our view that improved liquidity and a growing economy will support Greek banks' capacity to sustain financial commitments and gradually improve their balance sheets over the long term. Specifically, we expect depositors' and investors' confidence in the banking sector will improve following the recent successful completion of the fourth review," the credit rating agency said.
"We anticipate that increasing confidence and declining capital controls will pave the way for a steadier inflow of deposits and improve banks' access to capital markets. We calculate that about 13 billion euros, or 9 percent of deposits, has returned to Greek banks between end-May 2017 and end-May 2018 and banks have reduced their reliance on liquidity facilities provided by the European Central Bank by 63 percent or 36 billion euros. We expect these trends to continue, thereby improving the banks' liquidity positions. That said, we expect the recovery to be very gradual given how badly the private sector has been hit by the long and deep economic crisis in Greece. Therefore, we do not anticipate the full return of the about 49 billion euros of deposits lost between end-November 2014 and end-July 2015,” S&P said.