ATHENS – Struggling Greek banks buried under a mountain of bad loans with people unable to pay because of 8 ½ years of crushing austerity measures would be able to get rid of some 42 billion euros ($47.46 billion) under a Bank of Greece scheme.
Under the proposal, Greek lenders would transfer the about half of their deferred tax claims to a special purpose vehicle, which would then sell bonds and use the proceeds to buy the bad loans from lenders, the Bloomberg financial news agency said.
“We urgently need something like a bad bank, an asset management company,” Bank of Greece Governor Yannis Stournaras said at an event in Geneva. “We’re trying now, we’re developing a plan in the Bank of Greece to use the deferred tax credit or claims of banks vis-a-vis the state. And we do that because this has been state aid that has already been approved.”
Prime Minister and Radical Left SYRIZA leader Alexis Tsipras, breaking yet another promise, is letting banks sell bad loans as well to vulture collectors who are harassing indebted bank clients to pay but are not going after the former ruling New Democracy and its then-partner, PASOK, which owe 250 million euros ($282.51 million) because the bank officers who approved the loans without sufficient collateral were given immunity.
Greek bank stocks have dropped by some 40 percent this year amid lingering doubts that they can deal with the growing bad debt weighing down their portfolios and as European supervisors have asked them to reduce their non-performing exposures by about 60 percent by the end of 2021.