Stournaras warns of re­view risk

Cen­tral banker an­nounces up­com­ing changes to the frame­work for the man­age­ment of bad loans

Kathimerini English - - Focus -

Greece can meet its fis­cal tar­gets next year, cen­tral banker Yan­nis Stournaras said yes­ter­day, while warn­ing that the risk of not con­clud­ing the cur­rent bailout re­view is the big­gest threat fac­ing the econ­omy to­day. He also an­nounced that leg­is­la­tion on the man­age­ment of non­per­form­ing loans would be strength­ened.

“De­spite the pos­i­tive pro­jec­tions... se­ri­ous risks re­main,” Stournaras warned the Greek Econ- omy con­fer­ence or­ga­nized by the Amer­i­can-Hel­lenic Cham­ber of Com­merce in Athens. “The main risk would be the even­tu­al­ity of fail­ing to reach agree­ment on the sec­ond bailout re­view and any de­lays in im­ple­ment­ing the pro­gram or back­track­ing.”

The Bank of Greece chief noted that de­spite the slight re­duc­tion in NPLs over the last cou­ple of quar­ters, their high rate is the big­gest chal­lenge for the lo­cal bank­ing sys­tem and the Greek econ­omy in gen­eral.

For the ef­fi­cient tack­ling of the prob­lem he said that the cen­tral bank is ex­am­in­ing changes to leg­is­la­tion con­cern­ing is­sues re­lated to the tax treat­ment of banks’ pro­vi­sions for credit risks and loan write-offs, to the rights of cred­i­tors vis-a-vis non-co­op­er­at­ing share­hold­ers of debtor com­pa­nies during the restruc­tur­ing of prob­lem­atic com­pa­nies, and to the le­gal pro­tec­tion of the banks and state en­tity of­fi­cials in the process of debtor restruc­tur­ing.

The cen­tral banker also spoke about the ini­tia­tives un­der way to in­tro­duce a frame­work for the set­tle­ment of pri­vate debt with faster and more ef­fi­cient pro­ce­dures: They will in­clude a sec­ondary mar­ket for NPLs, a stronger frame­work for outof-court debt set­tle­ments and the pre-bank­ruptcy process, the re­form of the bank­ruptcy leg­is­la­tion and of the banks’ ethics code, and the in- 1.0576 tro­duc­tion of a frame­work for mon­i­tor­ing the banks’ over­all ac­tiv­ity in man­ag­ing their non­per­form­ing ex­po­sures.

Re­fer­ring to the prob­lems in the ap­point­ment of the sys­temic banks’ boards, Stournaras said the is­sues stem from the tran­si­tion from the old to the new, more de­mand­ing in­sti­tu­tional frame­work and should not gen­er­ate con­cern. “In the com­ing weeks the pending is­sues will be set­tled,” he stressed.

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