ocp192_en

3. Programme implementation3.2.10. Research, development and innovation78. Closer linkages between R&D and businesses are needed to boost the productivity andcompetitiveness of the economy. One priority is to translate better the scientific research strengths intomarketable goods and services. Efforts are also needed to foster technology transfer and addressbureaucratic obstacles. The authorities should foster the development of entrepreneurship within theresearch community by removing unnecessary restrictions to the commercial exploitation of innovativeideas, by providing incentives to members of the research community to engage in commercialventures, and by facilitating the flow of people and ideas between the research and businesscommunities. The authorities should fully implement the revised legal framework for R&D onceformally adopted, and a comprehensive national research and innovation strategy for smartspecialisation (RIS3) needs to be developed. The Greek RIS3 should have a strong thematic focus andprovide a national framework for R&D and innovation policies. The strategy must include governancemechanisms to integrate and coordinate the regional RIS3 strategies, a better collaboration of academiaresearchcentres and the business community, and measures to leverage private investment and fostersystemic innovation. The development of industry-driven competence centres could work as a catalystin that direction.3.3. STABILISING THE FINANCIAL SYSTEM79. The 2013 stress test exercise of the Greek banking sector has been completed. In March 2014, theBank of Greece (BoG) published the final report containing the results of the stress test exercise and adetailed description of the methodology used. In line with the approach taken in the upcomingECB/SSM Comprehensive Assessment, the baseline capital needs are binding and have to be covered ina nearer term. Estimated capital needs of the six Greek commercial banks amount to EUR 6.4 billionunder the baseline and EUR 9.4 billion under the adverse scenario with 3.5-year horizon, staring in June2013. The stress test was based on credit loss projections (CLPs) on total loans granted in Greece andabroad where BlackRock provided a key input: (i) the asset quality review (AQR); (ii) the credit lossprojections (CLPs) of the Greek commercial banks; and (iii) the reasonability assessment of the creditrisk parameters in the selected foreign subsidiaries. The evolution of balance sheet and P&L items (e.g.pre-provisioning profitability) was based on a conservative adjustment of banks' restructuring plansunder the baseline and the adverse scenario by the BoG supported by international consultants –Rothschild and Ernst&Young. As regards the mitigating actions (e.g. divestments), those alreadyincluded as a commitment in the restructuring plan were taken into account in the capital needsestimation. Additional mitigating actions not yet included in the restructuring plans could be used bybanks in their capital raising plans to offset part of their capital needs.Table 8. Capital needs (billion EURs)Baseline AdverseAlpha 0.262 0.560Eurobank 2.945 4.980NBG 2.183 2.502Piraeus 0.425 0.757Attica 0.397 0.434Panellinia 0.169 0.186Total 6.381 9.419Source: Bank of Greece80. The capital needs under the baseline scenario will be primarily covered by capital raisings fromthe private sector and to a lesser extent by banks’ supplementary mitigating actions. Theadditional mitigating actions could include the potential sale of assets such as foreign and domesticsubsidiaries and other possible measures included in their restructuring plans. The BoG asked banks tosubmit by mid-April 2014, their capital raising plans to address the additional capital needs under theBaseline Scenario. Banks have until end-May 2014 the obligation to submit capital-raising plansaddressing the Adverse Scenario, for approval by the Bank of Greece by end-June 2014. Thesuccessful completion of the share capital increases launched by two banks in March 2014 fully fundedthrough private investment is a significant step toward returning to the private sector, after their45