Monday 25 September 2017

Greek banks told to face up to huge stock of dud loans

Greek lenders are saddled with tens of billions of euro of non-performing credit
Greek lenders are saddled with tens of billions of euro of non-performing credit

George Georgiopoulos

Greece's big banks must take faster action to clean up their huge stock of troubled loans to help the ailing economy's recovery and set the banking system on a solid footing, Eurobank's board chairman said yesterday.

Greek lenders are saddled with tens of billions of euro of non-performing credit after a deep, protracted recession pushed unemployment to record highs, making it hard for corporate borrowers and households to service their debts.

So called non-performing exposures (NPEs), which include loans past due more than 90 days (NPLs) and restructured credit likely to turn bad, have reached €116bn, more than half of Greece's annual economic output.

Reducing this troubled-loan stock is the biggest swing factor for the country's banks as they continue to provision for impaired credit.

The NPE stock is stabilising, with some banks managing slight reductions in recent quarters.

With pressure from regulators to reduce the bad loan burden mounting, banks are close to finalising annual targets with the European Central Bank's Single Supervisory Mechanism (SSM). "The challenge for Greek banks today isn't capital adequacy but a strong management resolve to use effectively the substantial stock of provisions and collateral to clean up NPE portfolios," Eurobank's Chairman Nick Karamouzis told Reuters.

Mr Karamouzis said that such ammunition was already in place as banks have more than €58bn of provisions against NPEs and troubled loans are more than 60pc collateralised, mainly with real estate assets.

Failure to shrink bad loans risks refuelling uncertainty over banks' capita. (Reuters)

Irish Independent

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