Risk Management & Compliance Forum: Management of NPLs is the biggest challenge for Greek banks

Management of non performing loans and implementing an efficient management and monitoring framework on NPLs is one of the most significant strategic sectors of activity for credit institutions and one the basic pylons for the restructuring of the Greek banking system in relation with targets set by the Single Supervisory Mechanism, according to the conclusions of a Risk Management & Compliance Forum.

The Forum also concluded that new supervisory needs and new international standards that banks needed to implement, were not just a supervisory obligation but embodied significant changes in policies, methodology, procedures, governance and systems, adding value to banks’ business operating models.

The Forum also highlighted the significant role played by risk management units in the restructuring of the banking system and a new business landscape imposed on pan-European level, as new operating and governance models were adopted both for supervisory and business purposes, redefining the role and contribution of these units in the banking industry.

Platon Monocrousos, Group Chief Economist in Eurobank Ergasias, in his address referred to the development and course of a Greek economic restructuring program, along with investment opportunities and outlook. He stressed, among others, that developments in the domestic banking sector focused on dealing with the challenge of non-performing loans, resolving the problem of an over-indebted public sector and the restructuring of strategies for restoring the sustainability of public finances. He said Greece needed to balance its economy on consumption (90 pct of GDP in Greece, 76 pct in the Eurozone on average), investments (11.5 pct in Greece, 20 pct in the Eurozone) and exports (30 pct in Greece, 46 pct in the Eurozone). Greece also needed to resolve a huge deficit on the pension system (11.0 pct of GDP in Greece fro 2.5 pct in the Eurozone), raising saving rates (10 pct of GDP in Greece from 23 pct in the Eurozone) and noted it was a necessity to face competitiveness as top national priority.

Greek bank officials said a target set to reduce NPLs by 44 billion euros by the end of 2019 (from 110 billion currently) is ambitious but feasible on the conditon that procedures and initiatives were taken towards this direction.