Athens, March 21, 2016/Independent Balkan News Agency
By Spiros Sideris
“There is no question of a ‘haircut’ of deposits or of a ‘new recapitalisation’. Just a few months ago the greek systemic banks came out of a successful recapitalisation process that took into account even the most ‘adverse scenarios’, according to the stress test carried out by the European Central Bank. They now have very a very strong capital base, with the relevant indicator exceeding 18%, higher than the corresponding average of the EU’s largest banks, which is close to 16.7%”, said the president of Greek Banks association and the Greek National Bank, Louka Katseli, in an interview with the daily “Kathimerini”.
On the issue of the management of NPLs, Katseli says that it is a priority for the banking system and important initiatives are taken in this direction by the banks themselves, the Bank of Greece and the government”.
“To have a picture of the sizes. I should remind that the percentage of non-performing loans was only 4.5% of total loans in 2007 and now has skyrocketed to 42%. All banks have established special management units for the management of non-performing loans, have invested in infrastructure and human resources and offer a range of flexible and attractive setting products. Critical issue remains the effective management of non-performing corporate loans, especially when more than one creditor banks are involved. Timely restructuring of these loans will allow release of funds, which today are bound to absorb any losses, on the financing of the real economy and the restarting of viable business units”, adds the president of the EBC.
Asked about the criticism of the Katseli Law, the president of the SCF states that “inclusion in the law is based on very specific criteria and conditions for those who can prove to the district court permanently defaulted on their obligations. Therefore, not only has it not helped to exacerbate the problem of ‘red’ loans, but essentially has included borrowers, who previously had not served their debts because of documented impossibility, in a process of regulation and repayment of debts, facilitating, in this way, their reintegration in a normal bank behavior”.
Katseli continues saying that “removing therefore any source of systemic uncertainty and the successful completion of the evaluation of the Greek programme by the institutions are key requirements to reduce uncertainty and to consolidate confidence in the banking system”, noting however that “growth requires not only positive rates of growth in economic activity, but primarily sustainable economic and technological transformation of our productive base. This requires a significant increase in the share of investment in GDP, which has now fallen to 11% from 23% before the crisis. The increase in investment is possible through targeted institutional interventions and strong incentives, such as creating a stable and simplified fiscal environment, removing obstacles to the exercise of entrepreneurship, promoting improvement regulations to promote competition in the market for goods and services, the timely resolution of judicial abeyances, the use of innovative financial instruments, the activation of the new development law, etc”.
For the removal of capital controls, she notes that ‘it may take place in 2016 if the conditions set out above are met. The strengthening of confidence in the banking system needs time. Successful recapitalization of banks was an important first step. It needs political and economic stability, as well as signaling that the economy returns to a normality and is financed like in other European countries, through the usual ECB liquidity channels. These preconditions can be met within the next few months”.