The forthcoming unveiling of a proposed framework by the Bank of Greece (BoG) to manage the Olympus-sized “mountain” of “bad debt” burdening Greek systemic banks’ balance sheets has generated increased activity by all the actors involved in the country’s battered credit sector.
The sensitive “balancing act” by the four thrice-bailed out systemic banks (National, Alpha Bank, Eurobank and Piraeus Bank) – and to a lesser extent, non-systemic Attica Bank – is to reduce NPLs and NPEs without needing new capital amid current high interest rates for institutional borrowers.
Banking sector sources that spoke to “N” said that beyond the BoG proposal, another prospective solution is the “asset protection scheme” proposed by the Hellenic Financial Stability Fund, along with ubiquitous sales of NPLs to distress funds, restructuring of loans etc.
Meanwhile, Bloomberg on Tuesday quotes two sources in Athens who claimed that the Greek government is eyeing a plan “to lessen the burden for borrowers of modest means who can’t repay their debts”.
The goal is transform as many retail loans as possible from non-performing to performing.
Bloomberg also reported that, based on a preliminary plan that is still in the embryonic stage, a portion of the loans could be “subsidized” by the Greek state, with the rest of the capital and interest restructured into installments. December is given as the date for unveiling the plan.
Bloomberg again cites the other two, more prominent, proposals being prepared, i.e. a type of “bad bank” that “…could be created by splitting off the stricken lenders’ tax credits and worst loans; another envisaged a special purpose vehicle
