Bad-loan re­duc­tion goal to stay as is for now

Kathimerini English - - Focus -

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.

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