Greece mulling ‘bad loan’ scheme to protect banks


Oct 7, 2018-

Greece will create an asset protection scheme to help major banks struggling to offload billions in bad loans, a government spokesman said on Friday, as banking shares tumbled on the Athens stock exchange.

“We have specific plans. Part of them, in addition to speeding up efforts to clear bad loans, is to create an asset protection scheme,” government spokesman Dimitris Tzanakopoulos told 24/7 Radio.

“It is nothing more than an umbrella to further protect the bank system,” Tzanakopoulos said.

There are no plans to create a “bad bank”—which would take over non-performing loans from lenders—and the asset scheme will not be backed with public funds, Tzanakopoulos added.

“The banks have adequate capital,” he insisted.

On Wednesday, Greek bank shares tumbled amid a damaging budget squabble between Italy and the European Union, and concern about the lingering size of the banks’ bad loans portfolio, currently at nearly 90 billion euros ($105 billion).

After a breather Thursday, the Athens stock exchange on Friday closed 2.57 percent lower with bank stocks hammered again.

Among the leading Greek lenders, Piraeus bank shed 3.52 percent, Alpha lost 3.23 percent and National Bank dropped 2.61 percent.

The European Stability Mechanism (ESM), the eurozone’s bailout fund, has denied reports that it is part of the asset protection scheme.

“The ESM is following closely the latest developments in the Greek financial sector as part of its obligations as Greece’s largest creditor. However, press reports about the ESM being part of preparatory work for a possible intervention plan in favour of Greek banks are wrong,” the organisation said.

Published: 07-10-2018 08:12

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