Stournaras: It’s up to banks
Central bank chief says state has done enough for lenders and it’s credit sector’s turn to act
The state has done enough to help Greece’s credit sector, and it is now up to banks to take the initiative and reach out to debtors in need of support, before the specter of nonperforming loans returns to haunt local lenders, according to central banker Yannis Stournaras.
He met on Tuesday evening with the managers of the four systemic banks in an effort to formulate the final proposal for vulnerable households that will be sent to the European Central Bank’s Single Supervisory Mechanism (SSM).
“Banks have the right tools and must quickly identify those borrowers who are experiencing temporary difficulties and take relevant actions where necessary,” the Bank of Greece governor said in a statement to Kathimerini.
Stournaras noted that “the state, both during the pandemic and today, has adopted and implemented important support measures, especially for the weakest parts of society,” and underscored that “given the data so far, there is no need for new state assistance to the banking system.”
The BoG is cooperating with banks to ensure that the proposal to support vulnerable households by subsidizing 50% of the increase resulting from the rise in interest rates does not burden the banks’ capital through additional provisions. According to sources, the technical solution planned can prevent this eventuality and the condition is that the contracts for the subsidized loans are not amended. For this reason, the proposal that will be submitted will provide for the creation of a common fund in the form of a piggy bank, to which the banks will contribute so that the subsidy is granted.
The proposal under preparation excludes securitized loans and limits the scope of subsidized loans to those that banks have in their portfolios. “Banks cannot subsidize loans that are no longer in their ownership – i.e. those that have been transferred to funds,” stress competent sources. With these data, the perimeter of the loans that will be subsidized is limited to just under 2 billion euros.
