Stournaras warns of review risks
Greece can meet its fiscal targets next year, central banker Yannis Stournaras said on Tuesday, while warning that the risk of not concluding the current bailout review is the biggest threat facing the economy today. He also announced that legislation on the management of nonperforming loans would be strengthened.
“Despite the positive projections… serious risks remain,” Stournaras warned the Greek Economy conference organized by the American-Hellenic Chamber of Commerce in Athens. “The main risk would be the eventuality of failing to reach agreement on the second bailout review and any delays in implementing the program or backtracking.”
The Bank of Greece chief noted that despite the slight reduction in NPLs over the last couple of quarters, their high rate is the biggest challenge for the local banking system and the Greek economy in general.
For the efficient tackling of the problem he said that the central bank is examining changes to legislation concerning issues related to the tax treatment of banks’ provisions for credit risks and loan write-offs, to the rights of creditors vis-a-vis non-cooperating shareholders of debtor companies during the restructuring of problematic companies, and to the legal protection of the banks and state entity officials in the process of debtor restructuring.
The central banker also spoke about the initiatives under way to introduce a framework for the settlement of private debt with faster and more efficient procedures: They will include a secondary market for NPLs, a stronger framework for out-of-court debt settlements and the pre-bankruptcy process, the reform of the bankruptcy legislation and of the banks’ ethics code, and the introduction of a framework for monitoring the banks’ overall activity in managing their nonperforming exposures.
Referring to the problems in the appointment of the systemic banks’ boards, Stournaras said the issues stem from the transition from the old to the new, more demanding institutional framework and should not generate concern. “In the coming weeks the pending issues will be settled,” he stressed.
