While the approval by the European Commission's competition authorities of a Greek plan to cut bad loans at the country’s lenders by up to 30 billion euros is an “important step” in the right direction it will not be enough, and will have to be supplemented by the Greek central bank’s proposal, Governor Yannis Stournaras said on Friday.
The European Commission said on Thursday it had found “Greek plans aimed at supporting the reduction of non-performing loans of Greek banks to be free of any state aid.”
The Hercules Asset Protection Scheme aims to bring down the amount of bad loans by up to 30 billion euros by transferring them to special purpose vehicle – with state guarantees on senior tranches of the securitized nonperforming loans.
Speaking at the Piraeus Marine Club on Friday, Stournaras said Hercules must be followed by “other more holistic and systemic schemes, such as those developed by the Bank of Greece,” and noted the problem of deferred tax claims which should be tackled in ways “compatible with EU laws on state aid.”
He also urged the government to proceed swiftly with economic reforms, noting that the window of opportunity which is currently open may close if the global economic environment deteriorates.