HFSF plans for NPL coordination body

18 May 2016
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A total of 15 billion euros in loans to major business groups – of which 11 billion euros is considered nonperforming – should be entered into a special mechanism for their efficient and faster restructuring, the Hellenic Financial Stability Fund (HFSF) recommended on Tuesday, just as NPL management in Greece is set to enter a new era from June 16 with the second wave of liberalization for their sale.

Due to the prolonged crisis, many companies in Greece find themselves on the verge of collapse. While these firms could be made sustainable by taking the necessary measures to increase their competitiveness, they are still overindebted. It is estimated that the sum of bad loans in the country comes to 100 billion euros, of which 46 billion is in the form of corporate loans.

The HFSF commissioned McKinsey to carry out a study examining the major corporate loans in the portfolios of Piraeus Bank, National and Eurobank. It found that the mechanism could receive the bad loans of 170 troubled enterprises in five sectors, including tourism, industry, commerce etc. The bailout agreement obliges the bank bailout fund to create a mechanism that will help coordinate banks toward major corporate loan restructuring.

Presenting the study, the fund’s chief executive, Aris Xenofos, said, “The level of NPLs held by the four systemic banks reached the huge sum of 103 billion euros at the end of 2015, which dictates the immediate and efficient coordination of all parties involved.”

Meanwhile the multi-bill to be tabled in Parliament today includes changes in the status of bad loans, as well as private debt in general.

A number of restrictions to loan sales will only apply up until June 15, and the new law will provide for new rules in this market from the following day, signaling the second phase of its liberalization. The third phase is expected on January 1, 2018, signifying the full opening up of the NPL market.

As of June 16, mortgage loans secured for houses worth at least 140,000 euros will be able to be sold to specially formed companies, as will consumer or corporate loans not secured by main residences. Mortgages secured by houses below 140,000 euros will only be able to be sold in the third phase.

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