EU scheme to reduce Greek bad loans

ATHENS (AFP) - The European Commission yesterday approved a Greek scheme to reduce bad loans weighing down the country’s banks, limiting new credit and holding back economic recovery.

“I welcome that with the Greek government we have found a market conform solution to tackle the stock of non-performing loans weighing on the balance sheets of Greek banks,” competition commissioner Margrethe Vestager said in a statement. Under the scheme, a private securitisation vehicle will buy non-performing loans from the bank and sell notes to investors, with the Greek state acting as guarantor.

Over the last three years, Greek banks have removed some 30 billion euros in non-performing loans from their books, mainly through write-downs and loan portfolio sales, Bank of Greece governor Yannis Stournaras said on Thursday.

But they are still burdened by about 75 billion euros in NPLs, constituting 43.6 percent of total bank loans, he said.

The banks have agreed with the ECB to further reduce the ratio of NPLs to 35 percent by the end of this year, and to around 20 percent by the end of 2021, Stournaras said.
But even if these targets are achieved, the NPL ratio of Greek banks will still be five times the EU average, he said.

Greece expects its economy to grow by 2.8 percent in 2020 whilst respecting fiscal pledges to the country’s creditors, a draft budget released Monday said.
Greek bank private deposits have increased by 13.3 billion euros since the beginning of 2018, Stournaras said.