ATHENS -- Greek Finance Minister Christos Staikouras on Friday unveiled a framework of five initiatives aimed at supporting borrowers and banks. Speaking before the Parliament's Economic Commission on the smooth operaiton of the financial system, the challenges and its outlook, focusing on the management of non-performing exposures, Staikouras said that the stock of NPEs fell significantly from 75 billion euros in June 2019 (or 43.6 pct) to 59 billion euros currently, down 16 billion euros and down 48.5 billion from March 2016. He noted, however, that the non-performing private debt remained at very high levels in the country. The FinMin said that Greek banks' liquidity improved markedly after a full abolition of capital controls with deposits by households and enterprises rising by 26 billion euros in the period from June 2019 to December 2020. He stressed that a systemic bank recently issued a "green" bond and added that banks were scheduling a return to capital markets in 2021.
He underlined, however, that despite these positive data, the banking system continues to face challenges, mostly the danger of a new wave of non-performing loans as a result of the pressure on the real economy from the pandemic crisis.
He unveiled five iniviatives designed to support borrowers and banks:
1. Expanding and extending the "Hercules" scheme, as it happened in Italy. Such an expansion would cover the period from April 2021 until October 2022 with the aim to significant reduce NPLs.
2. Examining a Bank of Greece proposal for the creation of a bad bank, based on an analysis of cost-benefit for citizens, public sector and banks and adhering to preconditions set by European rules.
3. Gradually implementing a debt settlement and more flexible bankruptcy regulation for households and enterprises.
4. Promoting the implementation of a new "GEFYRA" programme for small- and medium-sized enterprises, subsidizing part of corporate loans for a period of 8 months.
5. Strengthening bank funding, by disbursing in the economy funds from New Generation EU, totaling 32 billion euros of which 19.4 billion in subsidies.
Staikouras said these actions will support innovation, boost cycle economy, attract private investments, strengthen employment policies, support energy transition and promote digitalization of the public and private sectors in the country, along with strengthening social cohesion.