Bank of Greece to unveil bad loan plan Thursday
The Bank of Greece, the country's central bank, will unveil on Thursday a plan on how banks will be able to offload bad debts in a bid to resume normal lending to the economy.
Sources told greekguru.net that the Bank of Greece will issue an announcement outlining broadly how this plan would work.
Saddled with bad loans worth some 90 billion euros, Greek lenders have seen their shares halve in value since the start of the year amidst concerns that they will need fresh capital to cope. They have been recapitalised three times during Greece's economic crisis.
Among the plans being examined by local banking authorities and the Greek government, according to press reports, is the state offering a direct subsidy to those unable to repay their loans, based on certain criteria.
Another scenario involves a type of bad bank being set up that could be created by splitting off the lenders’ tax credits and worst loans while another plan said to be considered is the creation of special purpose vehicle for bad debt involving government guarantees and using state cash buffers.
Many of the bad loans held by banks are tied to properties. Experts believe that the upward trend seen recently in the Greek real estate market will depend on how banks offload the bad loans - a basic condition to getting the economy back on its feet.