NBG & Greek Bank Woes: No Greek Debt As Collateral (NBG)

Greek banks are finding that they cannot use the Monopoly money to keep playing Monopoly.  Shares of the National Bank of Greece S.A. (NYSE: NBG) are getting hit this morning on news that the Greek banks are not going to be able to use Greek sovereign debt in the European Central Bank’s LTRO (long-tern refinancing operation).  This would be similar to outside lenders saying that U.S. banks cannot use U.S. Treasury debt as collateral for loans (a scenario to consider fearing down the road) but on a smaller scale.

The news is on the heels of Standard & Poor’s ratings services downgrading the sovereign nation of Greece down to a “Selective Default” just last night. 

As far as how this matters for the bank, here is what the WSJ noted in a broader bank by country piece today: National Bank of Greece received €6.3 billion in funding from the LTRO; management indicated no net increase to the bank’s ECB funding lines as it moved funds from the main refinancing operations over into the inaugural three-year LTRO.

NBG shares in New York (ADRs) is down 4.3% at $3.09 versus an adjusted 52-week trading range of $1.64 to $9.95.

JON C. OGG