Deutsche Bank remains negative on Greek banks after the announcement of their 2010 financial results, and proceeds with the decrease of the target-prices for the most of them, according to a report.
Q4 results marked a tough year. DB expects 2011 to be the same or perhaps worse if banks are forced to disengage from the ECB in an aggressive manner, while a lot will depend on the sovereign. The bank sees more downside than upside risks and maintains its cautious stance.
It expects banks to maintain their defensive stance through further loan deleveraging and cost-cutting. “We cannot exclude M&A as a means to improve liquidity and achieve cost synergies, but so far there have been two failed attempts”, said Deutsche Bank.
By extending the maturity of the rescue package and reducing the interest rate charged, the European Commission offered Greece some further breathing space. It is still up to the Greek government to regain the trust of debt markets by consolidating its finances and selling assets to retire old debt, said DB.
“As a result, both the 2011 budget and the E50bn (2011-15) privatization program are important catalysts”, it added.
Downside risks include a haircut on Greek debt, aggressive de-leveraging, big deposit outflows and higher NPLs. Upside risks relate primarily to better-than-expected fiscal performance of the sovereign.
Deutsche Bank decrease the target-price of Alpha Bank to €4.5 from €5.3, Piraeus’s to €1.3 from €1.6, Marfin’s to €0.4 from €1.6, while the target-price of Bank of Cyprus remains unchanged at €3.3 and increases ATEbank to €0.4 from €0.3.
source: CAPITAL
