Bad-loan reduction goal to stay as is for now

Greek banks are being urged to address their high load of bad loans to be able to fully fund the economy. Those still holding assets they can liquidate should be “the first to be targeted” in the effort, a source said yesterday. The country’s banks, which entered the 2008 crisis with nonperforming exposures (NPEs) of 14.5 billion euros, or 5.5 percent of their loan books, saw them rise to 106.9 billion, or 50.5 percent, last year. The Bank of Greece, in cooperation with European Central Bank, is monitoring the implementation of banks’ NPE action plans and progress versus agreed reduction targets. “Addressing NPEs which are very high is very important. Banks are overloaded and not able to fully fund the economy,” the source said, speaking on condition of anonymity. Banks have agreed with regulators on ambitious bad-debt reduction tar- gets spanning a three-year time horizon. Their aim is to cut their NPEs to 66.7 billion euros by 2019 from 106.9 billion in September, meaning their NPE ratio should fall to 34 from 51 percent. The source said there was no reason to change targets for NPEs, which include loans more than 90 days past due and restructured credit likely to turn bad. “They are medium-term targets. The beginning of the year was a bit disappointing,” the source said. The fast enactment of legislation on out-of-court settlements and bankers’ protection from litigation over the workout of bad loans would be helpful. “Sometimes legislators are slow to make reforms but that’s democracy. Delays on voting the laws is not helping in this regard,” the source said.