National Bank of Greece Had Negative Equity at Year End

National Bank of Greece, the oldest Greek commercial bank, saw its financial condition so damaged by the crisis that it was operating with negative shareholder equity at the end of last year.

The bank revealed its precarious financial position in a filing with the Securities and Exchange Commission yesterday. According to the filing, the bank’s shareholder equity was $5,632,572 in the hole as of Dec. 31, 2011.

It's not clear whether National Bank continues to operate with negative shareholder equity. It has received government aid in recent months which may have tipped its shareholder equity position back into positive territory. The Hellenic Financial Stability Fund has  promised to provide up to 6.9 billion euros to recapitalize National Bank.

The bank has said that it will have positive equity of 6.2 billion euros ($7.8 billion) after recapitalization.

The bank lost more than $19 billion last year. The largest loss maker for National Bank was its holding of the debt of the Greek government. It lost more than 10 billion euros ($12.7 billion) after taxes in the restructuring of the debt.

Yesterday, the European Central Bank said it had halted normal liquidity provision to some Greek banks because of their low levels of capitalization. The ECB’s rule prohibit liquidity provision to banks with negative equity, according to Reuters.

When Reuters broke the news of the ECB action yesterday, it was not clear which banks or how many of them were effected. One person told Reuters four banks were affected.

Without ECB funding, the cut-off Greek banks are now reportedly turning to Greece’s national central bank for Emergency Liquidity Assistance.

National Bank could not be reached for comment.

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