This scrutiny by European and Greek regulators will be completed after the summer, a banking source told Reuters, with the aim of plugging the capital holes before legislation comes into force in January that can require bigger depositors to contribute to the cost of rescuing a failing bank.
Greek banks already underwent stress tests and asset quality reviews (AQRs) last year as part of a continent-wide exercise that took nine months.
But since then the state of the four main lenders - National Bank, Piraeus, Eurobank and Alpha - has worsened dramatically along with the national economy, meaning they need their third recapitalization since Greece plunged into crisis in 2010.
European Union authorities must find out how much worse things have got before working out the size of the required recapitalization, to be made by either the European or Greek bailout funds.
This means the stress tests, which simulate how a bank can cope with a crisis, and the AQRs, which assess the value of its assets, have to be re-run.
Preparations are under way at the European Central Bank on the review and the assumptions that will be used. The yardsticks on how much capital the banks should hold under normal and crisis conditions may not be changed from last year's exercise.
"A standard process will be followed, assessing the capital gap for each bank. The minimum core equity capital ratio that will be required may be 8 percent under a baseline scenario and 5.5% under an adverse scenario, as in last year's stress test. But this has not been finalized yet," a source said.
According to figures from Greece's international creditors, the four banks could need 10 billion to 25 billion euros to restore their capital base.
Worries that such a massive boost will severely dilute the stakes of existing shareholders pummeled the banks' stock prices when the Athens market reopened on Monday after a five week closure. Over three days, they lost 63% of their market value before a rebound began.
Judged by European Banking Authority standards, banks' "non-performing exposures" - which include loans in arrears for more than 90 days and restructured credit unlikely to be repaid - hit 40% of their portfolios last year.
Greece's bank rescue fund injected 25 billion euros into the four in 2013 in exchange for shares, and last year they raised a further 8 billion from international investors.
The Hellenic Financial Stability Fund (HFSF) now has majority stakes in all the banks except Eurobank. It and private shareholders such as U.S. billionaire investor Wilbur Ross, who bought a stake in Eurobank, are nursing huge losses.
"There will have to be a race against time to wrap up the recapitalization by the end of this year. If it is done in 2016, when the BRRD directive goes into full effect, there could be a risk for large depositors," the banking source said. "Completing it this year effectively avoids a bail-in of depositors."
Unsecured depositors with more than 100,000 euros in their accounts will be spared if the recapitalization goes through this year. However, shareholders will be hit along with other investors holding junior debt before either the European Stability Mechanism or the HFSF injects the new money.
Finance Minister Euclid Tsakalotos said this week the international lenders also wanted to complete the recapitalization by the end of the year.
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