Greek banks need to resolve NPLs problem‏

The issue of non performing loans is one of the greatest challenges facing Greek banks and resolving this problem will be a defining factor that will allow banks to contribute to a national effort for the restart of the Greek economy, bank officials said.

In comments made during a banking forum last week, bank officials said that non performing loans grew again in the first quarter of 2015 after a 12-month period of slowing down their growth rate. Non performing loans are currently estimated at 78 billion euros, or 35 pct of banks portfolio, compared with an average of around 7.0 pct in Europe. In consumer credit, almost one it two loans was in delay, followed by corporate credit (35 pct) and housing credit (30 pct). The officials expect that non performing loans will reach their peak in 2015 before beginning to fall, six months later than originally planned. They noted that the reason for a jump in non performing loans form 4.3 pct in 2008 to around 35 pct today was an economic crisis which hit private incomes and companies profitability.

Greek systemic banks have already made provisions worth 50 billion euros to cover this problem, with the biggest part referring to loans offered to domestic customers. Banks have already made hundred of thousands rescheduling of loans and continue updating their programs while awaiting for the new governments measures to deal with the problem of non performing loans. The issue is currently in the agenda of negotiations with the countrys creditors.

"If we dont find a way to manage these, there is no possibility that the banking system will be able to do the job it is supposed to do. Thats why a non performing asset management company must be set up, in combination with Hellenic Financial Stability Fund, using the Funds buffer," Greek Finance Minister Yanis Varoufakis said last week.