this year. Thus, 2017 will be
de facto
be the year
when many of the structural problems faced by
Greek banks for quite some time now, will have to
be solved.
These problems, of course, include the major
issue of NPLs: an issue that, as anyone who is
directly or indirectly related with it can confirm,
may get out of hand if not properly handled with-
in the next few months.
Reportedly, bank managements realise the criti-
cality of the situation and are doing their best to
find solutions, through internal departments
established precisely for this purpose.
Moreover, it is also officially verified that we will
soon see further initiatives towards the same
goal. The banks are in need of effective legisla-
tion that will untie their hands and allow them to
take serious decisions for dealing with the issue.
The fact that total bad loan balances remain,
more or less, unchanged at 100 billion euros may
be a cause of concern, but on the other hand it is
also a sign of stabilisation, which is a necessary
condition for a gradual reduction.
From there, of course, there is a long way to go.
But, as the Chinese say, a journey of a thousand
miles begins with a single step.
In order to understand how this problem was orig-
inally created, here’s a short cautionary tale:
At the beginning of the last decade, the governor
of the Bank of Greece sent a circular, warning all
commercial bank managements that NPLs as a
percentage of –almost zero risk, at the time–
mortgage loans stood at 3.5%, and urging them
to take action for remedying the situation. Today,
this percentage has reached 35% (!) and nobody
knows what its ceiling will be.
And all this in less than 15 years, a period that will
leave its mark on this country’s history.
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