Banks and international investors convene at Bank of Greece to take stock of framework for NPL resolution

The FINANCIAL — About 200 representatives of the Greek financial industry, foreign investors and advisors on March 10 met with the Bank of Greece to take stock of the evolution of the supervisory and institutional framework regarding non-performing loans (NPL) resolution.

At 43.6 per cent of total exposures, loan delinquency is preventing the financial system from providing fresh funds for working capital and investment, according to EBRD.

The goal of the conference – jointly organised by the Bank of Greece and the European Bank for Reconstruction and Development (EBRD) – was to take stock of the emerging framework and explore solutions.

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Nick Tesseyman, EBRD Managing Director, Financial Institutions, said: “The EBRD supported the successful recapitalisation of the four principal Greek banks last November. Today’s conference offered an opportunity to discuss in depth the defining challenge in reviving the corporate sector of Greece through concerted efforts to resolve the country’s NPL issues.”

Theodore Mitrakos, Deputy Governor of the Bank of Greece, highlighted that a framework for the rigorous management of non-performing exposures (NPEs) is now in place:

The supervisory requirements for NPE management have been enhanced and the banks have been implementing the necessary organisational and operational changes.

A new Code of Conduct guides banks in their interactions with borrowers that are in arrears.

The capacity of banks to segment their NPE portfolio and to handle various types of NPEs has been assessed.

The framework for the licensing and operation of specialist firms regarding the the servicing or acquisition of delinquent loans has been established.

With these first elements in place, participants acknowledged that NPL resolution can now gain momentum.

The conference addressed three key areas:

Solutions for borrowers with exposures to multiple banks.

Conditions for the development of a secondary NPL servicing and sales market.

The bank’s internal workout of the large number of delinquent SME’s.