In its latest BICRA report, Standard & Poor’s has placed the Greek banking system in the highest risk category, along with countries such as Egypt and Belarus.
According to the rating agency, Greece is face significant deflationary pressure and will likely see weak financial growth over the next few years. Additionally, Standard & Poor’s estimates that the GDP will shrink in 2014 and points out that funding imbalances persist. The rating agency estimates that Greek banks continue to be dependant of external support, which in turn will affect their ability to produce profits.
On the positive side for the Greek banking system, Standard & Poor’s hails the support offered by the Eurosystem and notes that the banking system is gradually beginning to stabilize.
