Recapitalising Greece's four main banks will cost less than €20 billion, two senior bankers with direct knowledge of the matter said today.

They made their comments ahead of the outcome of an assessment of their needs expected by the end of the month. 

Capital controls, new austerity measures imposed as part of the country's third bailout and a mountain of non-performing loans have increased the credit risk and deteriorated the profitability outlook of Greece's banks. 

The European Central Bank's Single Supervisory Mechanism is currently assessing the capital needs of National Bank of Greece, Piraeus, Alpha Bank and Eurobank. 

"The capital shortfall for the four systemic banks should be less than €20 billion," said one senior banker who declined to be named. 

The ECB declined to comment. It is expected to release the results of the financial health check on the banks on October 31, another banker with knowledge of the matter said.
 

Fresh capital is needed to tackle the Greek financial system's credit quality problems, where bad loans exceed €100 billion or about 45% of all bank loan portfolios. 

Under an international bailout agreed last summer, Greece is set to receive up to €25 billion of international money to recapitalise its banks, three of which are majority-owned by Greece's bank bailout fund HFSF.  

Banking regulators at the single supervisory mechanism have signalled that deferred tax credits, or DTCs, will not be an issue in their assessment of the banks and will be accepted as core tier 1 capital, bankers said. 

Greek banks had deferred tax credits of €12.7 billion at the end of the first quarter, making up about 51% of their core regulatory capital.