The proposal by the Bank of Greece for reducing the credit sector’s bad loans by 40 billion euros with the use of the deferred tax assets has been tabled for negotiations between the government and its creditors.
Finance Minister Euclid Tsakalotos conceded that the government is now inclined to examine the proposal by the central bank and announced the setup of a task group to determine the details of the plan.
The change in the ministry’s attitude and its intention to open up to other solutions for the nonperforming loans problem are dictated by the pressure on the credit sector, with the continued selling of bank stocks. According to estimates, the negative climate in the market is linked to the fact that the other solution, proposed by the Hellenic Financial Stability Fund, for the transfer of NPLs worth 15 billion euros to an asset protection scheme, will not suffice to tackle the huge volume of the problematic portfolio, which amounts to some 85 billion euros.
Bank managers will discuss the plans of both the HFSF and the BoG with the new head of the European Central Bank’s Single Supervisory Mechanism, Andrea Enria, in Frankfurt soon.