Greece’s rate of non-performing loans grew to 43.6 pct in September 2015 from 39.9 pct at the end of 2014, with the percentage of NPLs in consumer loans rising to 55.4 pct, in corporate loans to 43.3 pct and to mortgage loans to 39.8 pct, the Bank of Greece stated.
The country’s central bank announced the introduction of quantitative targets for each credit institution to reduce NPLs starting from June 2016. These targets will be set after consultation with banks and the Single Supervisory Mechanism (SSM) and will be review on a quarterly basis. The obligation of banks to achieve their goals, combined with the introduction of a new regulatory framework -related among others with the creation of a secondary market for NPLs, faster legal procedures and flexible liquidation of guarantees by banks, is expected to have a positive impact in efforts to gradually lower the percentage of NPLs.
Among others, the Bank of Greece asks for interventions towards the restructuring of viable enterprises, stressing that in parallel with a debt restructuring it was crucial to have management changes -when a management is not cooperating- and changes in the structure and the business plan of a debtor company.
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