Despite commercial banks having gone through several rounds of restructuring private debt in the last four years, recent unofficial data put the total amount in arrears at a staggering 70 billion euros. This rises to more than 80 billion if one counts the sums contributed by the Financial Stability Facility for the dissolution of small banks.
Banks have already restructured 5.6 percent of their loan portfolios, which total 225 billion. About 45 percent of the 13 billion euros involved represent corporate loans, a further 4 billion has been written off.
The growth in new bad loans is continuing – albeit at a slower pace – undermining the banks’ recapitalization process. Clear indications as to the size of new bad loans are expected in the autumn from BlackRock’s second round of stress tests it is scheduled to carry out at the four big systemic banks. Some argue that even if the Greek economy does not return to satisfactory growth rates soon, the recession has hit rock bottom and the situation is unlikely to deteriorate much further.