Greek banks want details on bad loan securitization plans


Greek banks remain cautious about the two alternative proposals for the securitization of nonperforming loans (NPLs) presented to them by the Hellenic Financial Stability Fund (HFSF) and the Bank of Greece. They expect to see details and want to know whether one or both of them obtain European Commission clearance, local bankers told a forum in Athens on Friday.

The Greek credit system has a large backlog of non-performing exposures, amounting to some 85 billion euros in end-September 2018, or about 45 percent of all loans.

To tackle this problem of the credit sector and the economy in general, the HFSF has proposed a plan providing for the creation of bonds out of restructured NPLs — so-called securitization — whose repayment will be guaranteed by the state in case borrowers are in distress even after the restructuring of the loans.

Simultaneously, the country's central bank is tabling another plan for the creation of a special purpose vehicle to which a large part of the banks' NPLs would be transferred along with the lenders' deferred tax credits.

Both plans will be voluntary, but banks remain reserved toward them at this stage.

"We have not yet received the final drafts of the plans, and you know the devil is in the detail," stated Charoula Apalagaki, secretary general of the Hellenic Bank Association, at an event on NPL investment held in Athens.

"It is fine to have more tools, to give banks the option to use one or the other, but the plans have not matured yet and we have not yet received feedback from (the European Commission's) Directorate-General for Competition," Apalagaki said.

Speaking at the same event, Bank of Greece Deputy Governor John Mourmouras said the two plans complement each other, adding that "the securitization schemes are the silver bullet for the NPL problem" because "a more hands-on solution" is required.

Theodore Athanassopoulos, Alpha Bank's executive general manager for NPL wholesale, was also cautious about the securitization plans, stating that "different banks have different portfolios, and therefore different needs," but added that "the Bank of Greece scheme has a great potential for sales of loans."