Concerns are growing in regard to the efficiency of the new institutional framework on the setup of companies to manage nonperforming loans, as bank officials deem it very strict and dysfunctional, saying it will hamper the creation of an effective secondary market for bad loans.
The Bank of Greece is already receiving proposals for structural changes for a more flexible framework, with preparations to that end already under way. The country’s creditors are also pushing in that direction, considering the existing framework too bureaucratic, leading to major delays in the licensing of companies for that purpose.
Bank sources say tackling NPLs is vital and precious time has already been lost. They are also calling for the introduction of extrajudicial compromises, legal coverage for bank officials involved in loan restructurings, and a clean-up of noncooperative shareholders in problematic firms.