Greece's banks are entering crucial autumn talks with the Single Supervisory Mechanism (SSM), seeking permission to distribute dividends freely and to have their Pillar 2 capital requirements lowered, changes that could free up capital and boost financing, shareholder returns and the investment case for the sector.
The discussions center on two significant issues as the banks go through this year's Supervisory Review and Evaluation Process, known as SREP, according to the report.
The Dividend Question
Banks officially expect to be given the green light during their SREP evaluation to distribute dividends freely, without needing the supervisor's prior approval each time, the report said.
Credit institutions, probably all four of the country's systemic lenders, appear close to securing this outcome. If the dividend for the 2027 financial year, based on profits earned in 2026, does not have to pass through SSM approval, that would significantly strengthen the investability of Greek banks, according to the report.
What the SSM and SREP Involve
The SSM is the eurozone's banking supervisor, operating under the European Central Bank, and has overseen the currency area's largest lenders since 2014. Each year it runs the SREP, an assessment of a bank's capital strength, risk management and governance that also sets additional capital buffers above regulatory minimums, known as Pillar 2 requirements. A lower Pillar 2 requirement frees up capital that a bank can otherwise hold in reserve.
Background on Greece's Lenders
Greece's banking system is dominated by four systemically important lenders, which underwent years of recapitalization and restructuring following the country's debt crisis. Since then, dividend payouts to shareholders have needed the SSM's sign-off, decided on a case-by-case basis at each annual review.
The report said the two issues, freer dividend distribution and lower Pillar 2 requirements, are the central stakes of this autumn's talks between the banks and their supervisor, with further detail on the discussions published by newmoney.gr, the outlet originally reporting the story.
