Bank of Greece calls for a new cycle of sales of “red” loans to funds

A financial report has been released stating that “the final release of banks from the existing ballast of non-performing loans” should be made.

As noted, the percentage of non-performing loans in total loans (December 2022 8.7%) has decreased, but remains significantly higher than the corresponding European average. Therefore, the actions of the bank must continue to achievement of the established indicator.

Inflation and a slowdown in economic activity can affect the financial position of corporations and households, and contribute to the emergence of new NPLs.

Of course, the way to reduce “red” loans is either to dump money “from the sky” to borrowers and pay them in installments with the help of the state, or sell them to funds at bargain pricesas it has been in recent years. As a result, banks’ balance sheets are cleared of non-performing loans, but they are transferred to funds, and borrowers continue to pay (or not pay), because. just changed the “collector”.

Banks’ return to profitability in 2022 is positive, while revenues are expected to stabilize further in 2023. In the short term, raising the key interest rates of the ECB increases the net interest income of banks, since a very large part of the loans is provided at “floating rates”. However, in the medium term, this effect may be offset by an increase in banks’ financing costs, caused, on the one hand, by a gradual increase in deposit rates, and, on the other hand, by an increase in the cost of issuing bonds to attract liquidity.

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