The burden of new nonperforming loans on Greek banks after the pandemic crisis is expected to come to 8-10 billion euros, relatively greater compared to that faced by other European credit institutions, Bank of Greece Governor Yannis Stournaras said on Friday.
Addressing the 8th Banking Forum, Stournaras said that Greek banks, already burdened with a high stock of NPLs, will face an even heavier burden in the future since they have exhausted the greater part – if not the entirety of – their capital reserves to deal with them.
The central banker noted that despite the fact that Greek banks have managed to reduce their NPLs by around €50 billion since their peak in March 2016, they remain at very high levels (35.8% in September 2020), significantly above the EU average.
Stournaras stressed that Greek banks enjoy a satisfactory capital adequacy rate; however, this will be negatively affected by expected developments such as the implementation of IFRS 9 standards, the cost of securitizations of NPLs and the low quality of capital.
For these reasons, Stournaras reiterated the need for the creation of a so-called “bad bank,” to operate in parallel with the Hercules state guarantee scheme.
His proposal, he said, would deal with the problem of deferred taxation as well and could lead to a further reduction of NPLs by €40 billion.
He asserted that the cost of this bad bank will be covered exclusively by banks.