EU Finance Chief Says Greek Bad Loans Holding Back Recovery

European Commissioner for Economic and Financial Affairs Pierre Moscovici speaks during his meeting with Greek Prime Minister Alexis Tsipras, in Athens, on Wednesday, Jan. 16, 2019. Moscovici is in Greece ahead of a review of Greece's Economy by European officials.(AP Photo/Petros Giannakouris)

European Commissioner Pierre Moscovici, who oversees the bloc’s economy, said Greece’s recovery hopes from a crushing crisis that saw the Gross Domestic Product (GDP) shink some 25 percent is still being held back by a mountain of bad loans weighing down the banks.

Despite being a big supporter of Prime Minister and Radical Left SYRIZA leader Alexis Tsipras, who said he’s brought a comeback without mentioning, if so, it’s largely because he renege on anti-austerity promises, Moscovici said the bad loans are weighing down the banks, leaving them without enough capital for loans to help bring a rebound and investment.

He also said that while banks need to solve the bad loan problem that makes up as much as 40 percent of their portfolio – while hounding people to pay their loans, credit cards and mortgages despite being buried under big pay cuts, tax hikes, slashed pensions and job losses – that there must be protection from foreclosure of primary residences.

Tsipras promised that but after saying, “Not one home in the hands of banks,” has let them confiscate homes of what the government said were strategic defaulters who can afford to pay but were ducking it, using the crisis as an excuse.

Greek Prime Minister Alexis Tsipras, left, speaks with European Commissioner for Economic and Financial Affairs Pierre Moscovici during their meeting in Athens, on Wednesday, Jan. 16, 2019. (AP Photo/Petros Giannakouris)

Moscovici met with Finance Minister Euclid Tsakalotos and other top ministers after Bank of Greece Governor Yannis Stournaras said the bad loans are scaring off potential investors, four months after the end of three international bailouts of 326 billion euros ($371.6 billion) has left the country still unable to get back to the markets.

Stournaras, who spoke at the same time as Moscovici’s visit to Athens, told an audience at a Piraeus Bank event that the emphasis should be on the accelerated implementation of two plans to cut the bad loans, one by the Hellenic Financial Stability Fund and the finance ministry, and a second initiative by the Bank of Greece, the business newspaper Naftemporiki said.

The bad loans have reached some 40 billion euros ($45.59 billion), including 250 million euros ($284.97 million) owed by the former ruling New Democracy Conservatives and the now-defunct PASOK Socialists who aren’t being pursued and after loan officers who approved the transactions without enough collateral were given immunity from prosecution.

Greek Prime Minister Alexis Tsipras, left, and European Commissioner for Economic and Financial Affairs Pierre Moscovici sake hands during their meeting in Athens, on Wednesday, Jan. 16, 2019. Moscovici is in Greece ahead of a review of Greece’s Economy by European officials. (AP Photo/Petros Giannakouris)