International rating agency Fitch Ratings stated that the risks associated with the recapitalization of Greek banks are controllable, and the likelihood of government bailouts is not significant.
Fitch indicated that even under the worsening financial environment scenarios hypothesized by the Bank of Greece, the assets of the four largest commercial banks in Greece remain manageable.
Fitch believes that in the absence of a bailout involving senior domestic debt, Greek banks should be able to address the capital shortfalls identified during the Bank of Greece’s stress tests.
The agency stated that although a government bailout of the banks is possible, Fitch still expects new internal options and capital to be injected into Greek banks.
Fitch expects that as banks continue to resolve their capital shortfalls, smaller Greek banks will undergo further consolidation. Even future stress tests conducted by the European Union are not expected to result in any new, substantial capital shortfalls.
