Banks: At the table for the deferred tax

The last thorn for them lies near its solution. The reason for the deferred tax, which is expected to be found tomorrow at the meeting table which, according to information, the Governor of the Bank of Greece will have ( ), Giannis Stournaras with the CEOs of National, Eurobank, Alpha Bank and Piraeus Bank. Recently, the TTE Commander had said solutions are being launched to address the deferred tax in order to improve the quality of the capital of Greek banks. And in this direction, it appears that banks have proposed a solution that should be approved by the SSM. Information says banks propose to increase the amount of deferred tax repayment annually, thus accelerating its depreciation to 2034 from 2041. It is recalled that the deferred tax was a measure of tax assistance granted to banks, by Law 4172/2013 (Hardubeli Law), as compensation for the losses suffered by the PSI bond swap programme (2012 bond haircut). The banks were able to offset some of the losses of the haircut with a tax they should pay in the future. In this way the banks acquired a “coupon” which they used, taking it into account in their capitals, while within 30 years they would deduct from the “coupon” the money they had to pay as a tax to the State, until this amount was zeroed. The positive thing about banks is that the amount of the deferred tax is counted on their capital. The ECB therefore also takes these funds into account, reducing capital requirements equally due to stress tests. But now that banks have come out of the crisis, they have strengthened their capital adequacy and aim to increase dividends to their shareholders, they also seek to disengage themselves as soon as possible from the deferred tax. As the Bank of Greece reports in the Financial Stability Report, in June 2024 the supervisory own funds of Greek banks increased by 3.7% and amounted to 30.2 billion euros. However, the quality of the supervisory own funds of Greek banks remains low, as the definitive and cleared deferred tax claims amounted to EUR 12.5 billion, representing 41% of total supervisory own funds (from 44% in December 2023) and 50% of total Common Equity Tier 1 (CET1 Capital) funds (from 53% in December 2023).