Banking system recovering, challenges still remain, Staikouras says
"The banking system is gradually recovering and there is a gradual reduction of non-performing loans, but challenges remain and there is a need for a rapid reduction of NPLs in the next two to three years," Greek Finance Minister Christos Staikouras said, addressing the 2nd NPL Summit in Athens on Friday.
In his speech, Staikouras noted that despite strong signs of stabilisation and recovery the problem of dealing with non-performing loans remains and reiterated that the "Hercules" plan will be tabled in Parliament within the next few weeks.
The finance minister stressed that the main goal of the economic team and of the government in general was that credit institutions should once again become a lever for the growth of the real economy. An improvement in the composition, structure and quality of banks' assets will reduce risks, enhance revenue, strengthen the ability of capital formation, de-escalate funding cost and boost confidence in the banking system, he said. The government has promoted a full abolition of capital controls, lowered real estate tax, improved the quality of banks' loan portfolios and additionally, in cooperation with banks, improved the framework of protection for primary residence, he added.
Staikouras said that a good outlook for the Greek economy, mostly as a result of implementing a coherent and integrated economic plan that has led to a reduction of borrowing costs, has helped its credit institutions return to capital markets, brought back deposits and improved corporate and household credit ratings. The Bank of Greece recently said that domestic deposits grew by around 2.0 billion euros, or 1.5 pct, in first months of the new government.
The finance minister stressed that, despite strong signs of stabilisation, recovery and improvement, the biggest problem of the banking system in the country remained dealing with non-performing loans, currently valued at 75 billion euros. He noted that a reduction of NPLs from their historic highs of 107 billion euros in March 2016 was made mostly through write offs and sales, although there is a weakness in reducing NPLs through offer-efficient debt settlement solutions. Staikouras said that the implementation of the "Hercules" plan could lead to a reduction of NPLs for up to 40 pct of outstanding loans and stressed that the government was also focusing on the management of private debt.
