Banking executives in Athens look to Jan. 2017, at best, for framework to manage massive NPLs portfolios

By A. Doga

January 2017 appears as the target, under the best of circumstances, for finalizing changes in Greece’s legal framework towards better managing non-performing loans (NPLs), according to banking sector officials in the Greek capital this week.

That assessment comes after Tuesday’s high-profile meetings in Athens between representatives of institutional creditors (Commission, ECB, SSM and IMF) with top Greek banking executives.

The first month of the new year nevertheless means at least two more months of delay in substantially tackling a growing “mountain” of debt in the country, estimated to exceed 110 billion euros -- a veritable “sword of Damocles” hanging over Greece’s still fragile credit and banking system.  

NPLs dominated the specific meetings on Tuesday, along with the pending issue of replacing the top management of all four Greek systemic banks in order to meet corporate governance standards mandated by the SSM.

In earlier comments this week, Bank of Greece (BoG) Gov. Yannis Stournaras said changes in the board of directors at the four systemic banks will be completed by Oct. 31, 2016.

Greek banking executives reportedly conveyed to creditors the need for ensuring the effectiveness, speed and functionality of a proposed out-of-court settlement process -- essentially calling for standardized procedures (i.e. less “red tape”) that will make it a more appealing prospect for indebted SMEs and self-employed professionals.

Conversely, Greek bank executives are reportedly weary of the leftist government’s draft proposals on the issue, with concerns that added layers of bureaucracy will translate into more problems and delays for hundreds of thousands of NPL cases.

Greek banks are pressing for accelerated talks by all sides involved – creditors, the Greek government, the BoG – towards agreeing on the new framework for managing NPLs.