Tackling NPLs becomes even more difficult

10 January 2016
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The Greek government’s margin for maneuver is exceptionally limited in its negotiations with the country’s creditors regarding the fate of nonperforming loans, which still cannot be sold to non-banking institutions.

It’s not just that the time frame is particularly tight for such an important matter, as the issue will need to be resolved by February 15, but mainly that the creditors’ intentions were made clear during the visit to Greece by their representatives last month.

The government’s negotiating position has been made even harder due to the growth of the problem of nonperforming loans in recent months, with Athens bearing a significant share of responsibility for that phenomenon, for two main reasons: first because of the uncertainty surrounding economic policy in 2015 that sent the country back into recession, with a direct impact on borrowers’ capacity to pay off their debts, and second due to the expectations it cultivated among borrowers for exceptionally favorable settlements – particularly regarding the protection of main residences from repossession – contributing toward the creation of a new generation of “strategic defaulters.”

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