Banks prepare for crackdown on bad loans

Banks prepare for crackdown on bad loans

Banks are preparing for a drastic revision to their method of tackling nonperforming loans right after this Sunday’s elections, as Greece’s commitments included in the third bailout agreement provide for the drafting of an overall strategy that will efficiently manage the problem of NPLs, currently estimated at 35 percent of the total.

The core of the new strategy will concern the protection of the main residences of those who clearly cannot service their debts, with strict income and property criteria. New instruments for the management of bad loans will also be introduced while properties owned by borrowers not included in the above category will be auctioned.

The expansion of the NPL problem has led to provisions multiplying fivefold in the last seven years, from 8 billion euros in 2008 to 41.1 billion in July 2015, excluding debts that have been written off, which come to 8.8 billion euros.

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