‘Banks must stick to goal to cut NPLs’

Greece’s big banks must not relax efforts to reduce their bad debt after the positive outcome of a health check by the European Central Bank, a source familiar with the situation said yesterday, as the sector still faces challenges. Earlier this month the country’s four biggest banks emerged from an ECB stress test with no need to boost capital even when the simulation’s adverse economic scenario showed they stood to lose about 15.5 billion euros of their capital by 2020. “Now that stress test results are out, that does not mean that everything is done,” the source said. “Banks must stick to their commitment to address the challenges, including a reduction of nonperforming loans.” “A lot of good things have been done at Greek banks, the good outcome of the stress test did not come by chance. People were determined to address the situation. Addressing NPLs will take time, the commitment is ambitious but attainable,” the source said. “We need to see a number of parameters go back to normal – deposits coming back, confidence returning and moving forward on [lifting] capital controls.” Asked if Greek banks should be thinking of strengthening their equity capital, following in the footsteps of Italy’s Unicredit, which pulled off a record 13-billion-euro share sale last year to fund bad-loan disposals, the source said such decisions are taken by banks and not supervisors. “I expect sooner or later there will be a number of banks that will do what Unicredit did.”(Reuters)