Too early to see war effect on lenders

The exposure of Greek banks to Russia and Ukraine is negligible and any prediction regarding the final impact on financial stability would be extremely premature and precarious, the Bank of Greece (BoG) said on Thursday.

In its regular Financial Stability Report, the central bank noted that the impact from the Russian invasion of Ukraine has clouded the prospects of the Greek economy’s further recovery this year and exacerbated challenges for financial stability.

The central bank pointed out that the implementation of banks’ strategies for resolving their legacy stock of nonperforming loans (NPLs) in 2021 contributed decisively to improving their asset quality, but on the other hand affected their operating results and capital base.

The involvement of credit servicing firms in NPL resolution facilitated the operation of the secondary NPL market. However, it is necessary to intensify efforts toward sustainable restructuring solutions for borrowers in order to restore their financial soundness and ultimately enable the reintegration of their loans, under certain conditions, into banks’ balance sheets, the Bank of Greece said.