Browse By

Greece’s non-performing credit crisis under control after a fire sale of foreclosed accommodation

Greek systemic banks outperformed aims to decrease their “bad loans,” that the Bank of Greece reported on Thursday. The report has been viewed as crucial for its four systemic banks; Greece gets the largest share of Non-Performing Loans (NPLs) in Europe. The Greek banks offloaded $4,7bn and still face a huge mountain of $95,7bn  roughly 43 percent of their assets. That is over a 7 percent fall from June 2016, when it was just under $107bn roughly 50,5% of the entire assets.

Greek NPLs weigh than three times over the banking portfolio compared to the second one in the Eurozone, Italy. The object specified by the ECB is to decrease the NPLs portfolio to 35 percent by the end of 2019.

At the peak of this Greek emergency, unemployment reached 28 percent; the largest concern of non-performing loans include student loans, small companies, as well as mortgages. In 2008, the Greek banking system had a poor loan portfolio of only 5,5 percent of its total assets or$14,5bn.

Offloading NPLs needs a fire sale of homes in a nation that has among the largest share of personal home-ownership in Europe. In the most recent European Homeownership report from February 2018, Greek homeownership dropped from 75,1 percent in 2015 about 73,9 percent. The normal rate of home ownership in the Eurozone is currently 66,5 percent.

The firing sale was eased by means of a new system of digital auctions of foreclosed properties, that has been a crucial term of this $86bn bailout arrangement in 2015.

Nowadays, 21 percent of Greek families reside in rented accommodation. The drop in 2017 was one of the sharpest in Greece greater than any other EU member country. The banking industry has severely restricted issuing new mortgages, becoming the only one in the Eurozone with only 13,9 percent of new loans, second only to Italy with 15,9 percent. Even the Eurozone average is just under 28 percent of their credit portfolio.

Cutting the share of NPLs would spare funds and it will permit financing in the market, which is gradually recovering despite a favorable economic climate in the Eurozone.