Τhe Bank of Greece on Thursday presented a plan to reduce Greek banks’ non-performing loans by up to 47 pct. The plan envisages the transfer of deferred tax worth 7.5 billion euros to a special purpose vehicle (SPV) and of NPLs worth 40 billion euros, ANA reports.
The plan was included in the Bank of Greece’s report on Financial Stability which was released on Thursday. It will included, among others, the transfer of half of banks’ capital resulting from a deferred tax, to an SPV which in turn will issue bonds (securitization) to buy NPEs worth a nominal value of 40 billion euros, thus reducing by almost half Greek banks’ NPLs. These loans will be sold in market prices and will be divided into three categories (senior, mezzanine, junior/equity). The lower category (equity) will be covered by banks (up to 20 pct) and the Greek state. The evaluation of the loans to be transferred will be made by independent third parties. Investors are expected to absorb senior securities and a significant part of mezzanine securities. Prior to completion of the transaction, Greek banks must proceed, in cooperation with SSM, to a reform of their current goals in reducing NPEs, with the aim to achieve single-digit NPEs within three years.
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