Daily Management Review

Greece Proceeds With Two Plans To Deal With Bad Loans


11/17/2018


Greece is preparing parallely on asset protection scheme for cutting down on the pile “sour loans”.



Greece has minimum two working plans up its sleeves for providing asset protection in order to support the banks in reducing “sour loans”, the said information came from “bankers and sources close to the matter”, reported Reuters.
 
Moreover, a close source to the consultations informed that the government of Greece has turned to JP Morgan and requested the latter to present an “asset protection scheme” plan, while the central bank of Greece had also worked out a plan about tackling the mountain loads of bad loans owned by the banks. The source informed Reuters saying:
“Both the central bank and the government are looking at initiatives to help banks reduce their non-performing loan portfolios”.
 
In fact, the source also pointed out that it’s not necessary that the plan of JP Morgan will clash with the proposal put forward by the Central Bank and they could very well be complementary in nature. While, yet another source revealed that the proposal of Central Bank has been taken to the government as well as the international lenders of Greece, furthermore there are expectations that the plans will be made public soon.
 
Hellenic Financial Stability Fund, in short HFSF, took part in “three recapitalisations” and has stakes in the banks of Greece, whereby it had been reported that the organisation have put forth “own protection scheme earlier in the year”. The banking sector of Greece is manoeuvring through the biggest bad loans challenge. In the series of attempts made to save the situation, the above mentioned plans mark the latest of the efforts to rid the burden from the country’s economy which being deprived of its “potential source of growth”.
 
In an agreement with ECB regulators, the banks are to “shrink bad loans to 64.6 billion euros” by the year-end of 2019.
 
Additionally, the sources also mentioned that the banks will be transferring around 50% of “deferred tax claims to a special purpose vehicle”, whereby confirming the plan of central bank reported by Bloomberg. The said vehicle will then be selling about bonds to purchase around “42 billion euros of bad loans from the lenders”.
 
 
References:
reuters.com







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