For months, Greece has been wrangling with its creditors to both complete the current bailout reform review and see the release of the next tranches of bailout loans. And after Monday’s meeting of euro-zone finance ministers, there is no sign of a quick agreement in the negotiations.
The stalemate is a setback for the banks in returning to profitability, as shown by a number of crisis symptoms. First, the clean-up of the credit books is stalling. Meanwhile, dwindling deposits could necessitate capital increases – possibly placing the liability on shareholders and creditors.
Danièle Nouy, chair of the supervisory board at the European Central Bank’s Single Supervisory Mechanism, the SSM, has announced she will be in Athens in mid-March. She wants to gain a picture of the progress being made in consolidating Greek banks’ loan books.
At the close of 2016, the non-performing loans amounted to €108 billion, or about $114 billion. That corresponds to 45 percent of all loans granted. By the end of 2019, they are actually supposed to have worked the defaulting loans down to €68 billion, according to the agreement struck with the European Central Bank (ECB) and the SSM. In a first step, the institutes are to have consolidated €2.5 billion of the credit risks by the end of the first quarter.