Greek banks have become significantly strengthened in the January-September 2017 period, but must not relax their efforts since the banking system is still susceptible to external financial dangers, the Bank of Greece (BoG) warned in a review of the Greek financial sector released on Thursday.
Specifically, the Greek central bank called on banks to adapt to new challenges, especially by adopting new accounting models and handling more rigorously the forecasts for new non-performing exposures, as well as by undergoing the European Central Bank?s stress tests.
The existence of a capital buffer is positive, the BoG said, but it still called on banks to intensify their efforts and meet their targets of reducing non-performing loans (NPLs), which targets it described as “high and amibitious”.
“It is obligatory for banks to expand the soonest possible the (range of) solutions they are offering to borrowers and proceed to more drastic decisions, especially in terms of actions to restructure viable businesses, locate strategic non-payers, and apply a final solution to non-viable businesses,” the BoG report said.
In a simulation, BoG forecasts that even if banks were to sell 64.7% of their NPLs at 3% of their face value (29.8 billion euros), the index of their capital adequacy would not drop below 12.5%.
Specifically, the Greek central bank called on banks to adapt to new challenges, especially by adopting new accounting models and handling more rigorously the forecasts for new non-performing exposures, as well as by undergoing the European Central Bank?s stress tests.
The existence of a capital buffer is positive, the BoG said, but it still called on banks to intensify their efforts and meet their targets of reducing non-performing loans (NPLs), which targets it described as “high and amibitious”.
“It is obligatory for banks to expand the soonest possible the (range of) solutions they are offering to borrowers and proceed to more drastic decisions, especially in terms of actions to restructure viable businesses, locate strategic non-payers, and apply a final solution to non-viable businesses,” the BoG report said.
In a simulation, BoG forecasts that even if banks were to sell 64.7% of their NPLs at 3% of their face value (29.8 billion euros), the index of their capital adequacy would not drop below 12.5%.