Greek Banks Set for First Payouts Since 2008 on ECB Approval
(Bloomberg) -- The European Central Bank will allow Greek banks to make their first shareholder payouts in over a decade as the country emerges from a painful post-crisis restructuring.
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The shareholder returns this year will still be less than what the banks had planned, according to people familiar with the matter, who asked not to be identified as the decision isn’t final.
The ECB declined to comment.
The last time that a big Greek bank paid a dividend was in 2008, before the global financial crisis and just before the country’s debt crisis started in 2010. Since then, the lenders have been recapitalized as part of Greece’s bailout programs after large swathes of their loan books soured.
The ECB is expected to permit the payouts after Greek banks reduced non-performing loans and increased their financial strength while the economy gradually returns to normality. The country’s debt regained investment grade status last year.
The four so-called systemic banks — Eurobank Ergasias Services and Holdings SA, Piraeus Bank SA, National Bank of Greece SA and Alpha Bank SA — have already incorporated a dividend payout this year into their plans, pending the relevant approvals by authorities.
Shares in all four banks gained on Thursday after the news on dividends was published. The Athens Stock Exchange General Index also rose.
Read More: Piraeus Bank Sees Dividend Payment for First Time Since 2008
The watchdog is still assessing how the banks’ capital levels will develop, said the people. The ECB is considering the role that deferred tax credits for past losses play in Greek banks’ capital reserves as well as the outlook for their earnings if interest rates decline this year, they said.
Since October, the state has accelerated its divestment plan from the country’s lenders. The Hellenic Financial Stability Fund first sold its entire stake in Eurobank and it then did the same in November for Alpha Bank. It also sold a 22% stake in National Bank of Greece and in March it finalized the sale of its full stake in Piraeus.
The fund still has a 18% holding in National Bank and 66% in Attica Bank. Its divestment plan sees a full exit from the country’s lenders by end-2025.
--With assistance from Paul Tugwell.
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