Greek banks called to deal with soaring non-performing loans

Greek banks called to deal with soaring non-performing loans


By Lefteris Yallouros – Athens

The Governor of the Bank of Greece, G.Provopoulos will meet with Chief Executives of the country’s largest banks Friday to discuss the pressing issue of non-performing loans as part of the wider restructuring plans the institutions are currently running.

The meeting comes after Black Rock concluded its report on the Greek banking system and the portfolios of the country’s systemic banks.

The Bank of Greece is set to announce its annual report next week on monetary policy which will include an evaluation of the progress the economy has made as well as 2014 prospects.

The Bank of Greece told bank chiefs to present their loan policies going forward by September 2013 in order for it to table an exact operational plan for tackling problems found by the Black Rock evaluation.

By the end of 2013 –in collaboration with the EU, ECB and IMF – a timetable will be set by which banks will be called to go ahead with the settling of bad and non-performing loans. Specific procedures will be agreed through which loans will be assessed and dealt with.

The aim is to help households, small-medium enterprises and larger companies struggling with bank debt to cope with repayments. Criteria will be set and a case-by-case assessment will be carried through in order to determine which entities and persons have a proven inability to repay loans, credit-card debt and other obligations.

Income will most definitely come into the equation as well as the willingness shown by debtors to cooperate with banks in servicing their debts.

Greek banks estimate non-performing loans (NPLs) at 29 per cent of total loans, of which a large share are mortgages. So-called bad banks may be used to offload some bad loan exposure by finding an investor to take a minority stake in a subsidiary that will hold some of the loans.