...Recapitalisation Sufficiency Hinges on DTAs: The Euro Summit Statement on 12 July recognised the acute problems in the Greek financial sector and a package of up to EUR25bn for bank recapitalisation has been put together, with EUR10bn to be "available immediately" in a segregated account at the European Stability Mechanism (ESM). Fitch Ratings believes that EUR25bn should be sufficient under some scenarios. However, capital needs could also exceed this amount, especially if deferred tax assets (DTA) are not given full equity credit. Two Scenarios: We have estimated the impact on the four major Greek banks ¡ National Bank of Greece S.A. (NBG), Piraeus Bank S.A., Eurobank Ergasias S.A. and Alpha Bank AE - which have a joint market share in Greece of 96%, using two severe scenarios. In the first (we term European Banking Authority, or EBA), the banks together need EUR11.2bn, and in the second (Cypriot) EUR15.9bn, to be recapitalised to a 12% common equity Tier 1 (CET1) ratio. DTA Treatment...
