€79 billion bond bomb hits Greek banks with up to €1 billion accounting loss – Why windfalls tax would be a mistake

The surge in bond yields—for instance, the 10-year Greek government bond yield reached 4.56% in October 2026 compared to 3.35% in October 2025—is sending tremors through bank balance sheets, though without causing panic. The crisis is global, with the US 10-year bond skyrocketing to 5.35% as a consequence of the approaching debt crisis in the US with $40 trillion in national debt, while the ongoing energy crisis has purely negative impacts.

What do the portfolios of Greek banks look like?

Greek banks hold total investment portfolios in bonds and equities worth €85 billion, of which €79 billion consists of sovereign and corporate bonds, marking the largest bond holdings held by banks since their collapse following the PSI debt swap. Based on the increase in yields and the corresponding drop in prices, an accounting loss of €1 billion is emerging across the banking sector. A few essential clarifications:

1. In bond markets, prices matter immensely because portfolios are marked to market based on current bond prices.

2. At the same time, a critical element serving as a safety buffer is that 84% of bond portfolios are classified under held-to-maturity investment categories.

3. Additionally, financial institutions actively employ dedicated risk hedging mechanisms for both government and corporate debt securities. Within this framework, Eurobank holds an investment portfolio of €25 billion, National Bank of Greece €22 billion, Alpha Bank €18 billion, Piraeus Bank €17 billion, Optima Bank €1.3 billion, and Attica Bank / Credia Bank €1.6 billion.

A major mistake to impose windfall tax on bank profits

From time to time, political parties and politicians propose that Greek bank profits should face windfall taxation, for example at a 20% rate on total net profits after tax of €4.6 billion, requiring banks to pay €920 million. The main argument put forward is that banks pay little current tax due to deferred tax assets (DTAs) stemming from historical losses and negative equity following the PSI+ bond haircut and non-performing loans. Total deferred tax assets stand at approximately €8.8 billion as projected for the end of the year, representing significant banking capital reserves.

Conclusion

It is obvious that when such global risks lurk in bond markets, any discussion regarding windfall taxation on financial institutions constitutes a criminal and disastrous policy mistake. This is not a matter of petty political debate, but of fundamental respect for established market operating rules. It is entirely clear that any plan for windfall taxation would be an unacceptable mistake, undermining bank credibility and frightening international investors, where consistent regulatory frameworks matter far more than dividend distributions. Furthermore, banking institutions are directly supervised by the SSM, the Single Supervisory Mechanism, which would clearly take a negative stance against any windfall tax scenario.

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