The Deutsche Bank and the Bank of Greece forecast a positive climate for Greece in their respective reports on Monday.
In its report titled “Greece in 2018: Finally some light at the end of the tunnel,” the Deutsche Bank predicts Greece will successfully exit the fiscal program by August 2018, with research analysts suggesting that the successful outcome is based on the fact that “for the first time in a long while political incentives between Greece and European creditors are reasonably well aligned.”
Deutsche Bank analysts said the successful exit hinges on a Greece’s continued commitment to fiscal prudence and structural reform in co-operation with Europe; a normalization of the banking system involving a gradual wind down of NPLs and easing of capital controls; and political stability that in combination with a steady fiscal stance promotes a further recovery in consumer and business confidence.”
Meanwhile in its report, the Bank of Greece published data demonstrating that local Greek banks, which comprise around 97% of the banking system, have met their third-quarter 2017 targets for nonperforming exposures (NPEs).
These banks include the Piraeus Bank (Caa3 stable, caa2), National Bank (Caa3 positive, caa2), Alpha Bank (Caa3 positive, caa2), Eurobank (Caa3 stable, caa2) and Attica Bank (Caa3 stable, caa3).
The Bank of Greece, in cooperation with the European Central Bank’s banking supervision arm, has requested that banks set targets for both NPLs and NPEs. The regulators are closely monitoring these targets on a quarterly basis, and encourage banks to dedicate sufficient resources to tackle what is one of the economy’s most difficult challenges. Accordingly, banks have reduced their stock of NPEs by 7.6 %since stocks peaked in March 2016, over-performing their initial NPE target set in 2016 by around 2.9 billion euros and their NPL target by 300 million euros.