Wednesday, November 21, 2018

Greek central bank aims to use lenders’ tax credits to fix bad debts

by Kerin Hope

Financial Times

November 21, 2018

The Greek central bank will on Thursday unveil its plan for slashing the large pile of non-performing loans clogging up the balance sheets of the country’s banks in an effort to help them resume normal lending.

The proposal calls for Greece’s five largest banks to transfer up to €7.5bn of deferred tax assets to a special purpose vehicle, which would then issue bonds and use the proceeds to acquire about €42bn of non-performing loans (NPLs) held by the banks.

“This transaction would help restore confidence in the Greek banking system by cutting the bad debt portfolio in half,” said Spyros Pantelias, the head financial stability at the country’s central bank, who devised the scheme.

“It would also give the Greek banks full access to the capital markets and allow them to channel fresh capital into the economy,” he added.


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