ECONOMY

Nonperforming loans higher than banks admit to

The financial crisis is certainly taking a heavy toll on Greek society, with households and enterprises’ total debt having risen to at least 145 billion euros.

On top of the 52 billion euros in expired debts to the tax authorities and the 14 billion owed to social security funds, up to 80 billion comprises debts to banks that have have not been serviced for more than three months.

These soaring debts owed by taxpayers and enterprises are undermining every effort made to stabilize the economy and lead it to a rebound, given that the total amount is equal to almost two-thirds of the country’s gross domestic product. Data seen by Kathimerini indicate that one in every two consumer loans is nonperforming, as is one in four mortgage loans.

Shrinking incomes have resulted in 17 billion euros of consumer loans turning bad out of a total of 31 billion, while one in four households is at risk of losing their home as despite repeated arrangements offered by banks, they still cannot afford the monthly payments. More than 800,000 debtors have visited banks to renegotiate their arrears since 2009 and despite refunding and adjustments, some 50,000 households are completely unable to service their debts and have resorted to the provisions of legislation for overindebted households.

The sorry picture of household budgets mirrors that of small businesses, as the same data show that almost one in every two corporate loans is delayed, while among medium-sized enterprises one in three loans is nonperforming. These figures serve to dispute the official accounts provided by banks, which claim that the level of bad loans is not above 25 percent of the whole of their loan portfolios.

The growing level of nonperforming loans (NPLs) is piling pressure on the local credit system. With such a high rate of bad loans, which is dwarfing the sluggish pace of the return of deposits to Greek accounts, banks are simply unable to issue any new loans to small and medium-sized companies.

The only optimistic sign comes from the loans taken out by large companies, as their share of NPLs is showing signs of reduction. Bad loans to big enterprises have gone down to 13 percent from 17.5 percent last year. Given that the loan portfolios for such companies add up to about 65-70 billion euros, NPLs account for no more than 8 to 9 billion euros.