The Greek central bank has concluded
that the country’s banking sector is in reasonable shape with none
of the country’s leading banks having need of emergency

The Bank of Greece’s first Financial Stability
Report, published on 23 June, followed a stress testing exercise
which was applied to the country’s nine largest banks, representing
around an 80 percent market share of the sector’s total assets.

The report said the sector would be able to
withstand “strong shocks”, as defined by the central bank.

In particular, the model assumed that Greek
GDP would decline by 3 percent in 2009-2010, unemployment rise by 4
percent with non-performing loan ratios soaring from 5 percent in
2008 to 12.7 percent in 2010.

Publication of the report came only one week
after the country’s largest bank, National Bank of Greece,
announced a €1.25 billion rights issue, widely viewed by analysts
as opportunistic capital raising from a position of strength,
likely to be followed by a number of its rivals.