BANK OF GREECE

As the BoG governor Giannis Stournaras explained, the "Hercules" program that reduces problem loans through securitizations with government guarantees is progressing, but with problems, as the coronavirus pandemic affects securitization markets and the value of collateral.

Monetary policy was "the only game in town" to fight deflation in 2015, Bank of Greece Governor said, defending the bond buying programme of the ECB. "Decisions which provide fertile grounds for backtracking on European integration are rather harmful".

"Risks for banks under the pandemic are mostly credit risks, related to the depth and duration of the recession. Hence, banks should be careful enough to protect their balance sheets, while at the same time using all the considerable flexibility and liquidity granted by the ECB to provide credit to businesses and thus contribute to keeping the productive capacity of the economy intact. It is an unfortunate development that, at the moment that Greek banks had started to achieve a remarkable reduction of non-performing loans (NPLs), the pandemic has increased the risk of a reversal."

The bank's technocrats examined in detail all the alternatives for tackling the problem (maintaining the current strategy of loan securitizations, capital increases, bad bank, etc.) and concluded that creating a single bad bank achieves maximum efficiency, as it also achieves the largest reduction in non-performing loans per unit of capital.

Bank of Greece governor, Yannis Stournaras, met with the heads of the country's lenders on Monday and briefed them on the positive outcome of talks on the issue. This is seen a being a major development for the sector as it opens the path for the sale of large-sized securitizations of bad loans within the framework of the Hercules plan that will offer state guarantees on senior tranches, once conditions in the market return to normal.

The Bank of Greece will activate a plan to resolve the 60 pct of nonperforming loans (NPLs) not covered by the "Hercules" plan proposed by the government, bank governor Yannis Stournaras revealed while speaking at the Thessaloniki Summit 2019 on Friday evening.

A number of fund managers believed recently that Greek banks had turned the corner and started building positions in the sector. But most of them now looking over their portfolios in disappointment, realizing that there is a massive gap between preparing a proposal that will improve the balance sheets of lenders and implementing it. What did go wrong.

Greece's Finance Minister Christos Staikouras is scheduled to meet on Thursday afternoon with the heads of the country's banks to discuss the Hercules bad loan plan in a bid to secure the highest participation from lenders and reduce the risk of fresh uncertainty hitting the sector. The meeting comes after a report from Business Daily showing that the technical details of the plan submitted by Greece to the European Commission have not been approved by the European Central Bank's Single Supervisory Mechanism (SSM).

Bank of Greece (BoG) governor Yanis Stournaras estimated that growth rates could exceed 3 percent, under conditions, speaking at an event organized by the Stavros Niarchos Foundation at Yale University in the US.