Greek banks could soon bring new problems to Europe, as regulators test how sound they are after eight years of economic turmoil.
The four biggest lenders in Greece — Eurobank, Alpha Bank, Piraeus and National Bank of Greece — are being stress tested ahead of the other European banks. This is because the country is set to end its third bailout program in August and both markets and creditors want reassurances that the Greek financial system can stand on its own two feet.
"There are a lot of fears in the markets that regulators will see a negative surprise for at least one or two banks," Jonas Floriani, director at investment banking firm AXIA Ventures Group, told CNBC over the phone.
The four banks have come a long way since 2015, when they were last tested. Since then, they raised nearly 15 billion euros ($18.55 billion) in new capital. However, if a problem is found in at least one of them, the other three lenders will also suffer given that they are all exposed to the same economy. If one had a problem, there would be reputational repercussions for the entire system, making it harder for them to borrow money from other banks.
"I'd like to believe the regulator will be reasonable, but it's a banking system that needs to be fixed," Floriani added, regarding the high level of bad loans in the banks' balance sheets.