The government will have to implement five additional actions toward tackling nonperforming loans (NPLs), according to a Bank of Greece report, while the bank bailout fund chief stressed on Friday that the HFSF’s top priority is to contribute to a resolution of this issue.
According to the central bank, a solution should include a number of interventions in the coming period for the handling of a bad loan pile amounting to over 100 billion euros, described as the biggest challenge facing banks today.
The five steps recommended are, firstly, the reform of the framework for the extra-judicial settlement of debts, so as to allow for rapid, effective and transparent settlement of arrears to private parties and to state entities.
The second concerns the improvement of the infrastructures and the specialized know-how of the judicial system. The third is about the supply of financial training and consulting to overindebted households and the self-employed.
The fourth step provides for the resolution of long-standing issues related to the tax handling of write-offs and provisions both for borrowers and for creditors.
Lastly, the central bank recommends the introduction of clauses that will ensure the cooperation of shareholders in the efforts of banks for the streamlining of enterprises.
The BoG warned this week that immediate action must be taken, predominantly by the government, to tackle the NPL problem as any more time lost will probably have a dramatic impact on the real economy, jeopardizing efforts to return it to the path of growth.
Giorgos Michelis, the president of the Hellenic Financial Stability Fund, said on the occasion of the publication of the entity’s annual financial report for 2015 that in the next few months the fund intends to facilitate and promote a solution to the NPL problem, in the context of its mandate to preserve the stability of the local credit system.