ECB is­sues bad-loan warn­ing

Coeure calls for the rapid use of on­line auc­tions, but dis­misses IMF de­mand for as­set qual­ity reviews

Kathimerini English - - Focus - BY YIANNIS PAPADOYIANNIS

Euro­pean Cen­tral Bank Ex­ec­u­tive Board mem­ber Benoit Coeure yes­ter­day gave the Greek gov­ern­ment and the coun­try’s banks a clear warn­ing on non­per­form­ing loans (NPLs) but sug­gested that the In­ter­na­tional Mon­e­tary Fund will not suc­ceed in its de­mand for lo­cal len­ders to un­dergo as­set qual­ity reviews (AQRs).

Coeure ar­gued there are prob­lems in the han­dling of bad loans and asked for all tools to be uti­lized. He made par­tic­u­lar ref­er­ence to the need for the rapid pro­cess­ing of on­line prop­erty auc­tions, avoid­ing any fur­ther de­lays and the broad use of the ex­tra­ju­di­cial debt set­tle­ment mech­a­nism.

He went on to re­spond to the IMF de­mand that banks un­dergo new AQRs, say­ing there is no need for an emer­gency review. Coeure added that the plan­ning of Euro­pean au­thor­i­ties pro­vides for stress tests across Eu- rope, which will also ex­am­ine the pe­cu­liar­i­ties of Greek banks in depth, both re­gard­ing the high level of NPLs and the as­sess­ment of col­lat­eral and liq­uid­ity con­di­tions.

De­spite the banks’ in­sis­tence that the NPL re­duc­tion tar­gets for 2017 will be met, it is clear that the cred­i­tors do not view the progress made as sat­is­fac­tory, lead­ing to the call for a greater ef­fort with the use of all tools avail­able.

Sources say that a meet­ing on Tues- day be­tween se­nior bank of­fi­cials and the ECB took place in a neg­a­tive at­mos­phere, with Frank­furt of­fi­cials doubt­ing the ef­fi­ciency of len­ders in tack­ling NPLs and warn­ing that time is run­ning short – say­ing that un­less they achieve some pos­i­tive re­sults quickly the con­se­quences will be se­ri­ous.

Nev­er­the­less, co­op­er­a­tion be­tween the ECB and the IMF has in­ten­si­fied, al­low­ing them to find some com­mon ground, upon an ini­tia­tive 1.1963 by the gover­nor of the Bank of Greece, Yan­nis Stournaras, too. Coeure said the ob­jec­tive is to re­spond to the Fund’s con­cerns on the is­sue of the banks.

The IMF has been ar­gu­ing in fa­vor of a greater cap­i­tal in­jec­tion for Greek len­ders for years, and the amount of 10 bil­lion euros is of­ten men­tioned. How­ever, bank of­fi­cials un­der­scored in com­ments to Kathimerini that the 2015 stress test by the ECB was not dis­puted by any­one at the time.

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