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Transfer of NPEs to CSFs "Credit Positive", Moody's Says

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Bank of Greece. (Photo by Eurokinissi/ Yiannis Panagopoulos

ATHENS -- The increase of Greek banks' problem-loan outsourcing to credit servicing firms (CSFs) is credit positive, Moody's said in a report. The credit rating agency said that, based on figures released by the Bank of Greece in June 16 for the first quarter of 2020, CSFs raised their portfolio of non-performing exposures (NPEs) by 31 pct compared with the fourth quarter of 2019. "A gradual transfer of management of NPEs to credit servicing firms, which have the know-how in managing these loans, raised the prospects of recovering these debt and cleans banks' balance sheets, improving the quality of their assets," Moody's said, adding that this also allowed banks' managements to focus on disbursing new loans.

The central bank said that non-performing exposures transferred to CSFs rose to around 30.8 billion euros in the first quarter of 2020 from 23.5 billion in the fourth quarter of 2019, with the value of NPEs held by Greek banks totaling 68.5 billion euros at the end of 2019.