The nonperforming loans of major companies that have entered the Hellenic Bank Association’s NPL Management Forum exceed 6 billion euros. The forum aims to improve coordination among banks and find common solutions. The HBA is now considering a similar initiative to tackle the problematic loans of small and medium-sized enterprises too. The issue is crucial as only by bringing NPLs down to a more manageable level can the credit sector revert to smooth operations.
Around 50 enterprises have already entered the forum set up by the HBA. It is to these companies that banks have the greatest credit exposure and they are having problems servicing their loans due to the economic crisis.
The forum’s aim is for the banks involved to identify the specific problems in each case, to implement the optimum coordination of all parties, to explore alternative solutions and to realize most of the preparation necessary for rapidly finding the most efficient solutions for restructuring corporations and returning them to sustainability.
The second forum, that for SMEs, will operate in parallel with the extrajudicial mechanism for debt settlement and mostly concern cases that are rejected by that mechanism. The efficient operation of the extrajudicial mechanism is vital for banks so as to tackle the huge problem of NPLs, which exceed 100 billion euros.
Lenders are concerned about the risks to the credit system in case the assessment of applications for the entry into the mechanism of relatively low debts (from 20,000 to 50,000 euros) is conducted in handwritten form. Although these debts account for less than 5 percent of the entire volume eligible to enter the mechanism, they concern more than 100,000 enterprises and a slow process may well lead to an administrative bottleneck, blocking the system’s operation.
Therefore banks are asking for the extrajudicial mechanism to start only after the online platform for the automatic clearing of small debts starts operating.