When bank loans go to waste

Greek banks are undoubtedly paying a heavy price in the financial markets for the vulnerable position in which the country finds itself. As if that were not enough, however, the state continues to oblige those same banks to lend money to state corporations and other companies that are nonviable and unprofitable and have been for years. It does not make sense to expect lenders to provide loans to troubled corporations such as the Hellenic Railways Organization (OSE), the Lanaras textile group (Klonatex) or the shipyards of Skaramangas west of Athens – with virtually no guarantee of ever seeing that money again – at a time when these credit institutions are barely in a position to fund private companies that carry far healthier prospects. In the case of OSE, Klonatex and Skaramangas, the state is effectively throwing money into a black hole. In the meantime, Greek banks are deprived of precious capital at a juncture when they should be channeling it into the more robust and promising private sector.