Commission approves plan for bad loans
The European Commission on Thursday approved the Greek state’s “Hercules” plan to reduce local banks’ bad loans by up to 30 billion euros, and Deputy Finance Minister Giorgos Zavvos called on the country’s lenders to utilize the project, making the most of the favorable market climate that cuts the cost of state collateral.
The Commission’s competition authorities ruled that the transfer of bad loans to special purpose vehicles – with state guarantees on senior tranches of the securitized nonperforming loans – does not constitute a state subsidy.
Competition Commissioner Margrethe Vestager expressed satisfaction that cooperation with Athens has led to a solution that is compatible with the market, and European Stability Mechanism head Klaus Regling said the bad loan reduction process should be seen through as quickly as possible.
