Citi this week pointed to the first signs of economic recovery in Greece, a prospect expected to help defuse the ever-rising “Olympus-sized” figure of non-performing loans (NPLs) in the recession-battered country.
The banking multinational cited a “realistic target” of reducing NPLs by 30 to 40 percent over the coming three-year period, a figure that was discussed during a meeting on Wednesday between Citi representatives and executives of the Bank of Greece (BoG) and local credit institutions.
According to Citi, Greece’s systemic banks submitted targets for reducing NPLs and non-performing exposures (NPEs) to the BoG and the Single Supervisory Mechanism (SSM) last May, with results expected to be released by the BoG in September.
Targets differ from bank to bank, however, Citi estimates that the 30-40-percent reduction target through 2019 is realistic, with a mix, as it notes, of “debt reduction, foreclosures, liquidations and write-offs”.
Currently, Greece’s systemic banks are restructuring roughly 5 percent of their NPLs per quarter, a rate that would entail four years, on average, to fully restructure the NPLs sector.
Estimates of NPLs in the country all exceed 80 billion euros, with other calculations exceeding 100 billion euros. The issue poses an existential problem for domestic lenders, and by extension, prevents attempts at boosting liquidity in the capital-starved Greek economy.
Citi sold its Greek operations to Alpha Bank in 2014.
