Βy E. Sakellari
A plan by the Bank of Greece (BoG) to deal with tens of billions of euros worth of “bad loans” burdening Greek banks’ balance sheets, by creating a special purpose vehicle to manage a portion of the NPLs, will reportedly take at least six months and is dependent upon the approval of the SSM, DG Comp and the European Central Bank (ECB).
The BoG’s plan was detailed on Thursday evening by central banker Yannis Stournaras, with Greece’s four systemic banks and non-systemic Attica Bank as the prospective beneficiaries.
A crucial parameter surrounds the value of NPLs that will be transferred to the SPV, with independent auditors expected to determine the value during NPLs’ entry.
The BoG wants to present a comprehensive framework for dealing with “bad debt” that it will include in an annual review of Greece’s credit system, set for release on Nov. 22.
Based on figures submitted by Greek banks and already approved by the SSM, the target is for NPLs to drop to 33 billion euros by 2021, from the current 88 billion euros (June 2018). If successful, NPEs will drop from 45 percent to 20 percent by 2021.
The challenge is to reduce “bad debt” to average European levels without further reducing thrice-recapitalized Greek banks’ capitalization.
The “bad debt” figure peaked in March 2016, when NPLs in Greece reached 107 billion euros.
