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Greek Banks Broke Twice Over, As Bad Loans More Than Double Capital Base

Tyler Durden's picture




 

Back in January,  we highlighted the main problem plaguing the Greek financial system, and why a bailout (at least third, but likely fourth and fifth, and so on) is inevitable because "the amount of non-performing loans has exploded by a laughable amount, rising some 50% from December 2011, when it was "only" 16% and stood at a gargantuan 24% last month (indicatively, in the US this would mean that some $1.7 trillion in loans was nonperforming). And therein lies the rub, because as Kathimerini prudently notes, the "bad loans come to a considerable 55 billion euros. This means that the sum of NPLs already exceeds the total funds set aside for the recapitalization of the local credit system, which amounts to €50 billion." Yesterday, Kathimerini provided a much needed update on the amount of NPLs in Greece: according to the latest PwC report, NPLs have risen by another €10 billion in under one year, and now amount to €65 billion, which is now larger than the recapitalization funding and amounts to more than double the €30 billion capital base of local banks!

From Kathimerini:

Nonperforming loans (NPLs) have grown this year to more than twice the size of local banks’ capital, as, according to a report by PricewaterhouseCoopers (PwC), they now amount to 65 billion euros, while the capital base of domestic lenders stands at 30 billion euros.

 

PwC added that the share of bad loans has exceeded 30 percent of all loans issued, up from 25 percent at end-2012 and 18 percent at end-2011.

 

However, Greek banks are very reluctant to sell their bad assets due to the very low prices that investors are offering. Bank officials have told Kathimerini that the offers they have been quoted would make the sale of bad loan portfolios practically pointless.

And since the amount of NPLs is double the equity buffer designed to soak up precisely the kinds of losses that appear once NPLs are priced to reality, it means that nearly 4 years after its first bailout, the Greek banking system is still as broke as ever. In fact, it is now doubly broke and rising at about €15 billion per year.

What this means is simple: just like in Cyprus, the day of inevitable "template" reckoning, in which deposits are "converted" into capital is fast approaching.

Greek depositors: you have been warned. As for the local stock market, well... New Normal and such.

 

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Fri, 11/01/2013 - 08:13 | 4111271 Devotional
Devotional's picture

Greece ATHEX bitchez!!!

Fri, 11/01/2013 - 08:47 | 4111323 Peter Pan
Peter Pan's picture

With the Athens Stock Exchange at one end of the graph and gold at virtually the other end, do you think something might not be quite right, or are you suggesting that Indians and Chinese are sadly deluded in buying gold? Just asking as I would be most interested in your view.

Fri, 11/01/2013 - 08:51 | 4111347 Devotional
Devotional's picture

I forgot the /sarc.

Chill, I was being sarcastic :)))

I am a BIG gold buyer.

Fri, 11/01/2013 - 09:00 | 4111374 Peter Pan
Peter Pan's picture

Good man. You had me worried for a while. Funnily enough sarcasm is a Greek word as is crisis and austerity. I guess they have lived through and dealt with this shit many times before.

Fri, 11/01/2013 - 13:56 | 4112503 Motorhead
Motorhead's picture

YA MAS!

Fri, 11/01/2013 - 09:21 | 4111432 bubblemania
bubblemania's picture

Bullish

Fri, 11/01/2013 - 08:18 | 4111280 max2205
max2205's picture

They need to buy a bigger rug....the one they have is getting lumpy

Fri, 11/01/2013 - 08:38 | 4111326 101 years and c...
101 years and counting's picture

when the time is right, tptb will pull the rug and suddenly greece will be insolvent, all bailouts done and greece will be thrown out of the euro.  ie, LEH part deux.  but only when "they" are all short.

Fri, 11/01/2013 - 08:23 | 4111286 Momauguin Joe
Momauguin Joe's picture

Moar

Fri, 11/01/2013 - 08:57 | 4111360 Running On Bing...
Running On Bingo Fuel's picture

Broke Back Bankers, doing Greek.

Over.

Fri, 11/01/2013 - 08:40 | 4111297 XAU XAG
XAU XAG's picture

All western countries are turning Japanese!

 

Greeks are just ahead of the game but behind Cyprus

Fri, 11/01/2013 - 08:26 | 4111301 Peter Pan
Peter Pan's picture

Haircuts to have any remedal effect must be matched by debt write offs otherwise both home owner and depositor are eventually destroyed.

The situation in Greece was totally foreseeable because massive reductions in pay rates, massive unemployment and gargantuan tax hikes all affect serviceability detrimentally. Is it any wonder bad loans are spiking? And therefore is it any wonder that banks are literally broke?

Unfortunately, this was not just foreseeable. It was in fact planned.

Break Greece and you break the historical foundation of free thinking.

Fri, 11/01/2013 - 08:32 | 4111318 BandGap
BandGap's picture

At this point haircuts are just outright stealing. Hopefully the majority of Greeks see this and act accordingly.

Or, you can get blood from turnips.

Fri, 11/01/2013 - 08:45 | 4111339 Peter Pan
Peter Pan's picture

Haircuts are a form of stealing but the viability of the financial system requires some degree of proportionality between debts and income in order that the debts are sustainable.

You, as a depositor can continue to demand your pound of flesh but if the underlying value of the bank's security is badly trashed, what will you get?

Once odious or unsstainable debt is written off we can then expect interest rates to rise to a level where depositors once again earn a decent income.

Don't forget that after a decade of near zero deposit rates, US savers have effectively been haircutted on a yearly basis.

Fri, 11/01/2013 - 10:38 | 4111716 Hank Reardon
Hank Reardon's picture

Again you mean...just like all the other times Greece "broke"

Fri, 11/01/2013 - 08:29 | 4111304 29.5 hours
29.5 hours's picture

 

 

So in 3 years the NPL trend has steadily transitioned from 18% to 30% of all bank loans. Sounds like the spice is flowing nicely. Does spice making a sucking sound?

 

 

Fri, 11/01/2013 - 08:30 | 4111314 Peter Pan
Peter Pan's picture

It looks like NPL are tracking the unemployment rate. Or is that my imagination?

Fri, 11/01/2013 - 08:28 | 4111312 TheFreeLance
TheFreeLance's picture

Maybe they can run another cruise ship into an island and claim it was carrying 50b. Euro in gold. "Retreive" it -- presto instant recapitalization. 

Fri, 11/01/2013 - 08:38 | 4111324 The Reich
The Reich's picture

If only God would give me some clear sign! Like making a large deposit in my name at a Greek bank.

Fri, 11/01/2013 - 08:54 | 4111356 Peter Pan
Peter Pan's picture

God filled the earth with so many different riches to enable exchange to take place between human beings. However we thought we could outdo God by producing fiat trash.

As for God making a deposit for you in Greece, I doubt it. He has endowed Greece and Greeks with enough. They just have to wake up and realise they are being screwed into the ground for a bigger purpose.

Fri, 11/01/2013 - 08:42 | 4111333 papaswamp
papaswamp's picture

If they can get another loan out of Germany it will make all the other ponzis seem amateurish. Greeks have their bags packed for the next round of vacations.....

Fri, 11/01/2013 - 09:49 | 4111547 Momauguin Joe
Momauguin Joe's picture

Never been to Greece so I can't comment on their work ethic there. The American Greeks I've dealt with though seem overwelmingly lazy and stupid. For every hardworking and thifty Greek (there are some) there's probably 6 or 7 lazy and shiftless ones. These idiots sleep late into the afternoon, work under the table at pizza joints or diners for a few hours a week and, when they're not doing that, they frequent casinos and massage parlors to blow their money. They take out car loans on flashy rides they can't afford, invariably getting repo'd 6-12 months into the deal. Morons...

Fri, 11/01/2013 - 10:51 | 4111745 Luckhasit
Luckhasit's picture

"The American Greeks"

Ah, there you go. More American than they are Greek.

Fri, 11/01/2013 - 08:53 | 4111353 butchee
butchee's picture

Good thing there's leverage....Archimedes would be proud!

Fri, 11/01/2013 - 09:04 | 4111388 yogibear
yogibear's picture

It's whar happens when the whole bamking system is corrupt.

Same with the US.

Cook your books and divert funds bankrupting your bank, then ask for a bailout. Rinse and repeat.

 

Fri, 11/01/2013 - 09:07 | 4111393 Iam Yue2
Iam Yue2's picture

Hey, Greece is very clearly turning a corner;

"The amount of taxes that have not been paid by Greeks rose by 809 million euros in September, taking the total of new taxpayers' debts for this year to 6.1 billion euros.

Taxpayers now owe a total of 59.6 billion euros to the state, the Finance Ministry said on Wednesday. Between January and September this year, 985 million euros of overdue taxes were collected. Another 91 million euros was written off. The Finance Ministry also said it was behind in meeting its targets for tax inspections. By the end of September 204 checks had been carried out on large companies, against a target of 596 for the year.

Also, only 281 inspections on large wealth taxpayers had been completed by the end of September against an annual target of 910.

Meanwhile, in other news, Greece has won the Feta War, raising hopes that it can turn a current account surplus, through the export of the great white cheese."

Fri, 11/01/2013 - 09:38 | 4111499 Peter Pan
Peter Pan's picture

What the Greek government will not tell you is that a great deal of the amounts owing are retrospective property taxes. What they also will not tell you is that they owe billions for pathology services etc which they still have not paid but on which service providers are forced to pay taxes. On top of all that they tax property income without any deductions for interest , repairs and other outgoings.

Turning the corner?

More like going over the cliff.

I am not down voting you but you need to dig deeper to find the truth.

Fri, 11/01/2013 - 09:57 | 4111591 Iam Yue2
Iam Yue2's picture

Mm, i was being sarcastic....

Fri, 11/01/2013 - 09:12 | 4111414 nakki
nakki's picture

Who knows how many non performing loans there are in the US, and does it really matter when the FED can create fiat out of thin air? In the end, a new currency with a few "solvent" banks owning 90% of everything.

Fri, 11/01/2013 - 09:18 | 4111427 WTFUD
WTFUD's picture

Long human flesh greek kebabs.

Fri, 11/01/2013 - 09:32 | 4111480 ChaosEquilibrium
ChaosEquilibrium's picture

....and the ECB and FED keeping ALL European Equity markets near FLAT today!!!!

Fri, 11/01/2013 - 09:36 | 4111491 Lewshine
Lewshine's picture

Repeat after me, ALGOS don't care!!! PROGRAM BEFORE PRINCIPAL / FICTION BEFORE FUNDAMENTALS!!

Fri, 11/01/2013 - 09:37 | 4111500 sodbuster
sodbuster's picture

In the Keynesian World of Oz- this is uber bullish!!!

Fri, 11/01/2013 - 09:51 | 4111564 Scalaris
Scalaris's picture

 

In all fairness though, who could have known that Nonperforming Loans would have surged to oblivion along the bailout-propped peripheral Europe economies, just because bailout terms dictate that large numbers of public employees become redundant and inevitably dent the market which results in private sectors layoffs and damage the economy even further by reducing the already non existant tax contributions due to systemic corruption or cultural indifference, amidst an already dismal economic environment where the banking sector is unable to extent loans to jobless individuals whose sole collateral is already hypothecated and cannot be repaid because of nonexistant income, or to failing businesses whose credit lines were based on sales from market participants who now have no job, no assets, no purchasing power, while owing increased state taxation which was mandated in order to plug, the long-abused by consecutive imprudent administrations, empty coffers.

Practically impossible to calculate such eventuality.

Fri, 11/01/2013 - 10:10 | 4111631 Handful of Dust
Handful of Dust's picture

"BrokeBack Greece."

Fri, 11/01/2013 - 10:24 | 4111680 orangegeek
orangegeek's picture

Greece will be speaking German very soon.

Fri, 11/01/2013 - 12:04 | 4112023 dr_doom
dr_doom's picture

and yes, the yield of the 10Y greek govie is now 7.7 % after in 10 % in September. It all makes sense...

Fri, 11/01/2013 - 18:13 | 4113655 Radical Marijuana
Radical Marijuana's picture

Follow the "money" to its SOURCE! 

The "bad loan portfolios" always track back to the legalized counterfeiting that private banks get to make "money" out of nothing, as debts. Therefore, the whole world is trapped into debt slavery situations, which necessarily run away to become the increasingly nutty numbers of DEBT INSANITY.

Greece continues to be the chosen kidnap victim that the kidnappers are killing, to prove they are serious. The point is to finish destroying "democracy." After the international banksters succeeded in privatizing the public money supply, so that almost all money gets made out of nothing, as debts, OF COURSE, those who have that privilege to make "money" out of nothing find every possible excuse in order to make more ... There is no other game allowed, since that fraud is enforced by the government! The deeper problem is that money is meausrement backed by murder, and the debt controls are backed by the death controls. It was the application of the methods of organized crime which made and maintained the established systems. There are no genuine solutions outside of that frame of reference. Everything happening at the periphery, to countries like Greece, is going to happen pretty well everywhere else, eventually, since the fundamental structure of the system of money made out of nothing as debts NECESSARILY PRODUCES DEBT INSANITIES.

 

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