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Greek banks consider action plans for non-performing loans

03 October 2013 / 20:10:50  GRReporter
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Action plans for non-performing loans which have reached more than 30% are being considered by the leaderships of Greek banks. At the same time, according to a publication of To Vima newspaper, sources from financial institutions have refuted a publication by Reuters that Ethniki Bank and Piraeus Bank are preparing to create separate "bad" banks to deal more effectively with the problem.

They have indicated that the final restructuring of non-performing loans is to be reflected in the five-year cash plans which will be submitted to the Bank of Greece and the European Commission in mid October. The publication points out that even the leadership of Piraeus Bank, which has already announced its intention to turn Geniki Bank into a bank specializing in the restructuring of loans, has stated that the business plan for the subsidiary bank is still pending.

Sources from Ethniki Bank exclude the probability of creating a separate institution to manage non-performing loans. They add that Ethniki has already established a department to deal with them, and that its staff has increased manifold in recent years.

Among the scenarios presented in the Greek media is that of the establishment of a single "bad" bank to take over the restructuring of non-performing loans of all banks, including those where the process of liquidation has already started (Agrotiki, Postbank, Proton Probank, FBBank and the cooperative banks).

According to the banking sources, such a decision in combination with the partial liberalization of auctions in early 2014 could contribute towards a higher value than that of non-performing loans.

However, they add that in order for such a development to take place the authorities and the general shareholder in the four systemic banks, the Financial Stability Fund, have to formulate a central strategy.

Tags: EconomyBanksNon-performing loansFinancial Stability Fund
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