Eurobank Ergasias

The bank stock sell-off continued at the Athens Exchange (ATHEX) on Monday, as the decline in Italian and Greek bond prices and continuing uncertainty over the government's plans for a special-purpose vehicle to guarantee local banks' bad loans took the benchmark below 650 points for its lowest close since end-March 2017.

Greek bank shares came under renewed selling pressure on Monday as a rout in Italy's bond market eroded appetite for riskier euro zone assets. 

Piraeus Bank, Greece's biggest bank by assets and already the subject of recent selling on concerns over its plan to issue subordinated debt, tumbled more than 8 percent as did No. 3 lender Eurobank.

Greek banks are adopting a tougher stance toward entrepreneurs who do not service their obligations, by moving ahead with the direct sale of major enterprises' bad loans to funds.

The sales planned will not only concern large portfolio transfers but also individual loan sales, even those of small or medium-sized companies.

The Greek stock market made a remarkable recovery on Tuesday with the benchmark ending up just below the 700-point mark. The recent selling spree at Athinon Avenue, the decline in Greek bond yields and the relative euphoria on foreign markets set the stage for a stock surge but the relatively poor trading volume didn't give it the power required to clear the psychologically important level.

Most of the early gains registered by Greek stocks were wiped out by the end of Wednesday's trading session in Athens, with banks and mid-caps posting losses while the benchmark and other blue chips headed north.

Eurobank is confident of beating this year's sour loan reduction target agreed with European Central Bank supervisors and plans to make further progress by 2021, the chief executive of Greece's third largest lender said on Monday.

After Monday's respite, the benchmark of the Greek bourse tumbled back below the 700-point level on Tuesday, mainly due to the near-7 percent decline of the banks index, which continued to suffer pressure.

The improvement in the mood on global markets along with the rise in the prices of Italian and Greek bonds and Prime Minister Alexis Tsipras's rather measured financial pledges at the Thessaloniki International Fair over the weekend - which appeased traders - led to a significant rebound of Greek stocks on Monday after a week and a half of constant decline for the benchmark.

A group of Folli Follie's creditors are calling for an injunction protecting the Greek jewelry maker's assets to be lifted, saying they are due 44.5 million euros.

The second-quarter financial results of Greece's four systemic banks indicate that Eurobank, National, Piraeus and Alpha will need to increase the pace of bringing down their bad loans in the coming years to sustain profits and avoid a drop in capital. To that end they are diversifying their strategy and putting provisions on the back burner.