Piraeus Bank: an incredible move for consumers – “Alpha gets on its knees.”

Piraeus Bank: Piraeus Bank A few weeks ago launched the new option of even installments with your debit card.

More specifically, this option includes purchases over €50 made within the last 30 days.

The new function of converting the transaction into installments using a debit card is an alternative proposal for those who want to buy something in installments and do not have a credit card, but at first they need to pay the full amount and then the rest of the amount. The transfer is returned to you, as the bank will keep the first dose.

The conversion of the transaction into installments is carried out with immediate capital coverage for the first installment and financing of the rest through a loan. Unfortunately it has to pass approval.

Piraeus Bank: Another Collapse of Greek Banks?

The recent financial excitement has occurred as Greek banks are looking for money, and indeed… urgently!

In a difficult search for funds from the international market, Greek banks entered, which by the end of 2025 had raised more than 15 billion euros in additional funds to cover the new supervisory rules for capital adequacy.

This is the largest amount any national banking system in the eurozone has to raise, and the search for new money has become very expensive in the new market conditions.

The example of Eurobank, which has today embarked on issuing bonds, with the aim of covering supervision requirements, is typical.

The senior senior bond issue by the Bank was completed with great success, with bids raised for €650 million.

However, the interest rate on the issue jumped to 4.375% and was about twice the rate of the corresponding issue last year.

Analysts have noted that rising bond financing costs pose a threat to banks’ profitability.

As highlighted by European institutions in their recent Enhanced Supervision Report, the prevailing market uncertainty will affect banks’ funding costs and may have an impact on their strategy to issue more securities to meet minimum regulatory capital requirements (MREL). .

As the report indicated, banks are seeking to balance pressures on financing costs in other ways, such as increasing lending, reducing provisions for bad loans, and developing alternative sources of income through digital transformation, so that there is no harm to profitability. .

Greek banks face the most serious problem in the eurozone with the new supervisory rules, which oblige banks to form an additional capital cushion (MREL), which can be used in the event of liquidation.

Characteristically, according to an analysis conducted by ING last November, the total capital shortfall to cover MREL requirements for Eurozone banks was estimated at €42 billion, of which €16 billion (38%) related to Greek banks.

The amount has decreased slightly since then, but it still exceeds the €15 billion that Greek banks will need to raise from the market by the end of 2025.

This effort is made difficult given rising inflation and an expected rise in interest rates in the eurozone, combined with the end of the European Central Bank’s emergency bond-buying program, is pushing up bank bond yields and raising the cost of raising capital, as shown in the Bank of Greece chart. (Financial Stability Report, data as of 5/6/2022).

“In any case,” the Bank of England notes, “the increase in bond yields suitable for MREL coverage makes the future attempt of a bond issue by Greek banks more expensive.

In addition, bond yields are expected to be affected in the near future by geopolitical developments (the Russian invasion of Ukraine) as well as increasing inflationary pressures.

As the Bank of Greece notes, “the withdrawal of the ECB’s extraordinary accommodative monetary policy measures to limit the effects of the pandemic will burden interest expenditures, while an additional burden will arise from bond issuance needs (additional Tier 1, Tier 2 and principal debt) to meet supervisory requirements, Including Minimum Requirements for Own Funds and Eligible Liabilities (MREL)’.

Banks have already issued many bonds, which were done at a fairly low cost, thanks to favorable market conditions.

The Bank of England reports that “banks” have already taken initiatives with the aim of covering the minimum requirements for own funds and eligible liabilities (MREL) until the end of 2025. In particular, banks have issued Tier 2 bonds, green bonds and large unsecured bonds, while The observed decline in weighted assets also plays an important role.

Taking into account the MREL framework, issuance of unsecured bonds as well as principal bonds is expected to accelerate in the coming years.

In more detail, the banks issued bonds with a total par value of 3.5 billion euros in 2021.

Senior secured notes amounted to €2.4 billion, with a coupon from 2% (Eurobank Senior Pref.2027) to 3.875% (Piraeus Senior Bank Pref.2027), while subordinated notes amounted to €1.1 billion, with an issue coupon of 5.5% (Alpha Bank Subordinated 2031) to 8.75% (Piraeus Bank Jr Subordinated always).

Greek bank bond yields increased during the last quarter of 2021 and the first quarter of 2022, while they decreased in April 2022.

In any case, the increase in bond yields suitable for MREL coverage makes it more expensive for Greek banks to issue bonds in the future. In addition, bond yields are expected to be affected in the near future by geopolitical developments (the Russian invasion of Ukraine) as well as increasing inflationary pressures.