...Recap Necessary Step: The recapitalisation of Greek banks after the European Central Bank's Comprehensive Assessment (CA) is a necessary step towards re-establishing the banking system's viability and restoring financial stability. If the banks' remedial actions are approved, they will address an identified capital shortfall of EUR14.4bn to cover problem assets and enhance loss-absorption buffers against the still highly challenging operating environment. The aggregate capital improvement represents around 8% of Greece's GDP and will increase the banks pro forma common equity Tier 1 (CET1) ratios to an average of 14.8%. The capital injections will also improve banks' liquidity, particularly if they result in the reinstatement of the waiver allowing the ECB to accept Greek collateral for monetary policy operations. A Long Road Ahead: However, this is the third recapitalisation since 2013 and alone is not enough to restore financial stability in Greece. The banking sector needs to regain...
