BoG plans sin­gle ‘bad bank’

One en­tity may man­age all the non­per­form­ing loans of lenders un­der res­o­lu­tion to max­i­mize re­sults

Kathimerini English - - Focus - BY YIAN­NIS PAPADOYIANNIS

The Bank of Greece is con­tem­plat­ing the cre­ation of a sin­gle “bad bank” to merge all the loan port­fo­lios of banks un­der liq­ui­da­tion such as ATEBank, Hel­lenic Post­bank, Probank, Pro­ton and cer­tain co­op­er­a­tive banks. The aim of the cen­tral lender is to max­i­mize the amount that can be re­cov­ered from their as­sets.

The BoG has com­mis­sioned a study by Black­Rock So­lu­tions to this end. The in­vest­ment man­age­ment firm has pro­posed cen­tral­ized man­age­ment of all liq­ui­da­tion pro­ce­dures and the draft­ing of a timetable and quan­tifi­able tar­gets for the ac­cel­er­a­tion of the process, as well as out­lin­ing the best pos­si­ble out­come.

Should this process go ahead, it will re­sult in one so-called “bad bank” which will be re­spon­si­ble for han­dling the bad loans of lenders that have been ab­sorbed by other banks in re­cent years. BoG sources clar­ify that the sin­gle en­tity will only con­cern banks that have been un­der res­o­lu­tion sta­tus and should not be con­fused with the over­all man­age­ment of non­per­form­ing loans in the bank­ing sys­tem. They add that the pos­si­bil­ity of the cre­ation of a bad bank to han­dle all of the sys­tem’s non­per­fom­ing loans has been ruled out, say­ing that the four sys­temic banks – via the spe­cial­ized de­part­ments they have cre­ated – are re­spon­si­ble for clear­ing out their port­fo­lios and han­dling their bad loans.

Cur­rently, the clear­ing out of the bad parts of ATEBank, Hel­lenic Post­bank, Pro­ton etc, is be­ing con­ducted by in­de­pen­dent en­ti­ties that seek to re­trieve part of the prob­lem as­sets. Greece’s cred­i­tors have crit­i­cized the way banks’ res­o­lu­tion has been han­dled and have de­manded changes that will speed up pro­ce­dures.

Bank sources ar­gue that the tar­get will be the re­cov­ery of some 2 bil­lion euros from the non­per­form­ing loans of the bad banks. How­ever, the cen­tral ad­min­is­tra­tion, through spe­cific timeta­bles and tar­gets, could fetch a far greater amount and in a shorter pe­riod of time. In this con­text it may be pri­vate com­pa­nies that un­der­take the man­age­ment of those port­fo­lios.

The Hel­lenic Fi­nan­cial Sta­bil­ity Fund (HFSF) has spent some 14 bil­lion euros to cover the fund­ing gap of banks placed in res­o­lu­tion in re­cent years.

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