Single Supervisory Mechanism head Daniele Nouy
The heads of Greece’s banks returned to Athens from Frankfurt last week concerned about the European Central Bank’s intentions regarding the upcoming stress tests.
At a meeting with the chief of the ECB’s Single Supervisory Mechanism (SSM), Daniele Nouy, in Frankfurt last week, the European official gave domestic banks little scope to exercise their common positions – mainly concerning certain technical aspects and the stress tests’ timetables – saying: “You do what you have to do, and leave the rest up to us.”
Senior bank sources tell Kathimerini that although there is some apparent impatience among Europe’s political leaderships for the successful completion of the Greek bailout program, this cannot be achieved without Greek banks being given a clean bill of health. And given the major problem of nonperforming loans as well as the general situation in the country, this is not something that will easily obtained.
The market and investors appear to be taking it for granted that the banks will pass the stress tests – and this may prove true – but for now that optimism is not based on fact, banking sources note.
Greek lenders will get a better picture once the macroeconomic scenarios that will be used in the stress tests are made public, in late January or early February at the latest.
Nouy also sent a stern message to the managers of Greece’s banks about the need for a speedier and more efficient reduction of bad loans, demanding for less talk and more action. She further stressed that the time frame has already been exhausted and that this might have very serious implications for the banking system.
The issue of online auctions was also addressed at the Frankfurt meeting, with the SSM’s technocrats expressing their concern over the small volume of foreclosures being conducted. They went on to warn that unless there is a significant acceleration in the period from February to April, this might affect the results of the stress tests.
The SSM officials also voiced their annoyance at reports of an informal agreement between banks and the Greek government to avoid auctions of properties valued below 300,000 euros – showing that foreign technocrats are very aware of developments in the country at every level.