ATEbank fails stress test again - New pressure on Greek bank to sell stake in AIK Banka

ATEbank and Eurobank EFG failed the pan-European stress tests, the Bank of Greece stated on Friday.

The other six Greek and Cypriot lenders to take part in the European Banking Authority (EBA) process have made the cut.

Eurobank had a core Tier 1 capital ratio of 4.9 percent, just below the minimum threshold of 5 percent, while ATEBank flunked with minus 0.8 percent, the central bank said.

While ATEbank was always considered at risk of failing the test, despite a recent share capital increase, Eurobank's failure constitutes a nasty surprise for the country's banking system. The lender needs 58 million euros to meet the capital target, according to an EBA statement on Friday.

ATEbank said its exposure to 7.85 billion euros of Greek sovereign bonds and loans was the main reason for its failing the test and that corrective measures would bring the ratio for 2012 up to 12.4 percent.

It noted that provisions of 750 million euros and a planned convertible bond for 235 million euros would help make up a shortfall of 713 million euros needed to meet the capital target.

The announcements that ATE plans to sell its stake in Nis-based AIK Banka could be first heard last summer, after that Greek bank failed the first stress test. ATE has recently adopted a voluminous restructuring programme for the period by the end of 2012. ATEbank entered the domestic market by acquiring a stake in AIK Banka in late 2006. Purchasing AIK Banka's shares at the price of about RSD 5,200 a piece, ATE acquired 20.3 percent of common shares of that bank.

Also, in the same period, the Greek bank acquired 24.9 percent of preferred shares of AIK Banka. ATE's stake in AIK Banka is worth about EUR 56 million at the moment. The common shares of AIK Banka ended last week at the level of RSD 3,048, growing by 1.6 percent per week.