On Thursday, the Greek government introduced a bill into parliament aimed at further reducing non-performing loans in banks’ portfolios by expanding the Hercules program.
The bill includes measures to increase transparency, awareness and respect for debtor rights for servicers, modernize the out-of-court mechanism and expand protection for vulnerable debtors, improve the operating structure of the loan sales and recovery agency, introduce measures to increase competition such as the offering of loans by non-bank agencies, and expand operations through the IRIS system.
Minister of Economy and Finance Kostis Hatzidakis noted that government intervention in relation to banks and loans combines the goal of financial restructuring and the protection of vulnerable debtors with a number of modern and fair solutions.
Services will operate under new, stricter transparency rules to ensure debtors are provided with more complete information.
The extrajudicial mechanism will become simpler, and the expansion of the Hercules program will work for the benefit of the banking system.
At the same time, competition in the banking system is becoming more intense due to initiatives such as allowing non-banks to offer housing and business loans.
The expanded Hercules program, according to the agreement reached with the European Commission, will have a guarantee supply ceiling of up to 2 billion euros and will last until December 31, 2024. During the previous two stages of the program, the Greek state provided guarantees in the amount of 18.7 billion euros, which allowed to reduce the volume of non-performing loans of banks from 40.6% in December 2019 to 8.6% in June 2023.
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