G. Zavvos: ‘Hercules’ example for dealing with NPLs for other countries

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The reform of “Iraklis” is important not only for Greece but also for the course of European integration, while it can be an example for dealing with non-performing loans (NPLs) both inside and outside the EU, said George Zavvos, former Deputy Minister of Finance , responsible for the Financial System, speaking at the Center for European & Economic Law, in a speech on “1992-2022: Thirty years of European banking union – The Challenges of Transformation for the Greek Banking System”.

In a detailed presentation of the “Hercules” program, he pointed out, among other things, that Hercules shows that the capital markets can contribute to solving the problems of the banking market. “Hercules proves that an acute problem of the European Banking Union can be solved, ie the systemic risk posed by non-performing loans (NPLs) in a country with small economies, such as Greece, by appealing for its solution not to the taxpayer but in the international capital markets to raise capital without a budgetary burden, which is why I believe that despite the great progress that European legislation has made to date, there should be initiatives to harmonize operation of securitizations “.

Mr. Zavvos also said that “the possibilities of deepening in certain areas of securitizations, such as securitization with state aid and securitization of small and medium-sized enterprises, should be explored. A key point is to improve the quality and comparability of MES data.” It would be appropriate to set up a central data collection platform at European level and to adopt common reporting standards that facilitate the transparency and pricing of NPLs. data platform mainly for SMEs will crucially facilitate the securitization of their loans, and in our country it will be useful to create the Central Credit Registry, a system already provided by the government for funding from the Recovery Fund, which will further improve per transparency of the MES market, and will be an important factor in attracting investors “.

According to Mr. Zavvos, in July 2019, when the ND government took office, the NPLs reached 75.3 billion euros, ie 43% of the total loans – the highest percentage of NPLs in the euro area. Just two years later, in June 2021, according to the data of the Bank of Greece, the percentages of NPLs amounted to 29.4 billion euros, ie 20.3% of total loans (a decrease of approximately 46 billion euros). The course of the dynamic reduction continues and already before the end of this year a systemic bank announced single-digit MES rates while the other systemic banks will achieve single-digit MES rates within the first half of next year according to their forecasts, but also those of international credit rating agencies. Especially in the last few days, continuous international reports of credit rating agencies confirm that due to Hercules I and Hercules II, Greek banks are returning to normal and the NPL index is expected to fall to 5% of all loans in the banking sector, said the bank. .Ζαββός.

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Source From: Capital

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