Greek banks cumulate losses by Romanian standards but announce profits in IFRS

Most Greek banks ended the first half of the year with losses according to Romanian Accounting Standards (RAS), with the biggest losses being posted by Bancpost (117 million euros) and Piraeus Bank (26.3 million euros). After four years of aggressive growth of the lending market, especially on the retail segment and on the segment of real estate projects, the Greeks ended up with over 17% of the assets in the banking system, but the quality of the portfolios started to suffer due to the crisis. Therefore, parent banks had to come up with capital increases: 151 million euros at Bancpost, 20 million euros at Alpha Bank, 18 million euros at Piraeus and 15 million euros at Marfin.

With the exception of Bancpost and Emporiki, local subsidiaries of Greek banks continue to report profits according to international accounting standards, but they accumulate losses according to the provision-related methodology required by the NBR (National Bank of Romania).

Piraeus had been one of the players that pursued an aggressive market share growth in the last four years, seeing it climb from around 1% in 2005 to 3% at the end of 2008, without making any acquisitions. On June 30th, the bank had 1.9 billion euros in balance sheet assets, with their share falling to around 2.5% of the overall system. Piraeus had become known on the market as one of the players with the most flexible lending terms.

With a market share of just 0.2%, Emporiki ended the first half of the year with a 14.3 million-euro loss in RAS, whilst Marfin saw a 12.7 million-euro loss, amid 522 million-euro assets (0.6% of the market).

Alpha Bank, which dropped in the assets ranking from the 7th to the 9th position, is now close to the threshold between profit and loss, with a 1 million-euro loss in RAS, as opposed to a 34.7 million-euro gross profit, according to International Financial Reporting Standards (IFRS). The bank accumulated a significant exposure to the real estate sector, by providing funding to many residential complexes, which are currently no longer able to sell the apartments.