The ECB’s Single Supervisory Mechanism (SSM) is reportedly expected to request an accelerated clearance rate for non-performing loans (NPLs) severely weighing down thrice recapitalized Greek systemic banks’ balance sheets.
The goal, according to sources, is NPLs in banks’ portfolio to fall under 20 percent of the total within the next three-year period, whereas the goal for 2022 is for a “bad loans” to comprise a single-digit figure in portfolios.
Nevertheless, the target appears unlikely to be achieved without mass write-offs or sales of NPLs blocks to distress funds or other portfolio managers in the secondary market.
Currently, 35-percent reduction in NPLs, as announced by Greece’s four systemic banks, appears as extremely ambitious.
In June 2017, NPLs comprised a hefty 50.6 percent of banks’ portfolios.
The SSM is the mechanism that grants the European Central Bank a supervisory role to monitor the financial stability of banks based in Eurozone member-states.
