Greek State pledges to defray the deferred taxes of loss-making banks over a 30year period
A bill tabled on Wednesday at the Greek Parliament provides State guarantees that it will undertake to defray the Greek banks' deferred taxes, in case the latter do not manage to stay profitable in a period of 30 years.
This pledge will have a welcome estimated 3 billion euros "capital relief" repercussion on the banks involved, especially valuable in the framework of the forthcoming banking stress tests, to be conducted by the European Central Bank (ECB). The ECB - under its supervisory role - will thus be allowed to identify that much added supervisory capital to affected Greek banks.
It is noted, that the tax treatment of the banks, themselves, is not affected in any way by the specific bill. Additionally, it is not certain that taxpayers in Greece will actually be called to pay for the banks' deferred taxes, as this would only happen in case they consistently operated at a loss.
In case the Greek State were to actually defray such deferred taxation costs, it would do so through offering a bond to the banks involved, whose value it would exchange for banks' shares.
