ATHENS – Having already gotten 50 billion euros ($55.07 billion) in bailouts, Greek banks buried under a mountain of bad loans making up as much as 40 percent of their portfolios could get another 9-billion-euro ($9.91 billion) injection from the new New Democracy government.
Sources who weren’t identified told the business news site Bloomberg that it will come in the form of state guarantees unless that’s overruled by the European Commission as unlawful state aid to them.
It’s based on what Italy did though with Greek banks eager to get rid of at least 20 billion euros ($22.03 billion) in bad loans that includes 250 million euros ($275.37 billion) owed by New Democracy – with a former administration giving the bank officers immunity for approving the money without sufficient collateral – and the now-defunct PASOK Socialists who served the Conservatives in a coalition.
Greek banks have some 75 billion euros ($82.61 billion) in bad loans, much of it given to business executives who didn’t pay and didn’t account for where the money went and a series of scandals that brought down state banks.
That includes the saga of businessman Lavrentis Lavrentiadis, who was released from pre-trial detention in 2014 as prosecutors said he had embezzled 511 million euros ($562.86 million) from Proton Bank, which the government had to rescue.
Now it’s forecast that through the APS, which will be known as Project Hercules, lenders could reduce their bad loans by 30 billion euros ($33.04 billion) an unnamed source told the news site, which said the scheme will allow lenders to use government guarantees to back the securitization of bad-loan portfolios.
The bad debt would be transferred to a special purpose vehicle (SPV) that will issue senior, mezzanine and junior bonds. The senior debt will be guaranteed by the government and will remain on the banks’ books.
Under the former ruling Radical Left SYRIZA – with then-Premier Alexis Tsipras reneging on his vow “not one home in the hands of banks” before he allowed foreclosures – banks were also allowed to sell bad debt to vulture collectors who are hounding people for repayment, including those who can’t pay because of 9 1/2-years of harsh austerity measures that included pay cuts, tax hikes, and worker firings among other conditions.
Read more at thenationalherald.com
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