ECB official to ERT: Greek banks must push for faster return to healthy balance sheets

The Greek banking sector has expended tremendous efforts to resolve its key issue, that of non-performing loans (NPLs) inherited from the previous crisis, Andrea Enria, chair of the European Central Bank’s (ECB) Supervisory Board, told national broadcaster ERT in an interview.

The interview was taped on November 24 and broadcast on November 28.

Enria said that NPLs dropped by nearly 25 billion euros from December 2018 to the third quarter of 2020, but a lot still needs to be done, as Greece has an NPL ratio of 36.7 pct to total loans, compared to other countries in the Eurozone which have limited them to 3 pct.

The active “Hercules” program must be applied in its entirety, he urged, while banks must seriously examine faster return of health in their balance sheets. It’s not a time to wait, because the recession created by the coronavirus pandemic will lead to worse problems, he noted.

The ECB official also said that the initiative for a “bad bank” should be coordinated at European level, otherwise it is possible that banks in one country benefit from better conditions than those in other countries, something that would contravene the principles of bank union.

Among significant reforms the government can accomplish to help this and make the sector more viable and better able to support the economy include implementing the new bankruptcy code, strengthening the framework for e-auctions over defaulted loans, and clearing the bankruptcy cases of individuals still awaiting a court decision.