The Prospects of the European Banking Union and the Hellenic Banking Sector Challenges: A Preliminary Exercise

Establishing a Banking Union was a rallying issue in the European Union the last years. In the December 2012 Summit it was decided to set up a Banking Union that will streamline and standardize procedures in the eurozone across banking system and prevent national debt crisis that affects the common currency. At least 200 large and multinational banks will be placed under a Single Supervisory authority controlled by the European Central Bank and if needed it will be empowered to monitor all 6000 banking in the European Union. The scope of this paper is to present briefly the progress towards the Banking Union agreement and to sketch a preliminary exercise program of the Hellenic Banks’ adaptation, rescheduling and recapitalization needs. Bank of Greece estimated that the amount of €50 billion earmarked under the Economic Adjustment Programme is appropriate to cover the Greek banking sector’s recapitalization and restructuring costs. Therefore, banks’ institutional and private shareholders will be required by July 2013 to cover a minimum of 10% of new common equity capital as to keep credit institutions privately run. Still, there is no agreed time schedule on banks’ recapitalization.