Greek govt, banks set up taskforce on EU Recovery Fund loans

The Greek government and lenders will set up a task force to oversee lending to businesses, particularly small and medium sized operations, and the efficient use of money from the Recovery Fund, it was decided yesterday. During a meeting held with the participation of the Ministry of Finance and the Ministry of Development, banks and the Hellenic Bank Association, the Development Bank and business representatives, talks focused on the use of 12.7 billion euros of cheap loans from the Recovery Fund, which will be further leveraged with bank credit and how this liquidity can be effectively channeled into businesses. It was decided that a 5-member working group will be set up under Finance Minister Christos Staikouras and the president of the Council of Economic Experts, Michalis Argyrou, with the participation of the Hellenic Banking Association, which will be represented by Stavros Ioannou, Deputy CEO of Eurobank. The Development Bank and businesses representatives will also participate in the group.

The purpose of the working group is to closely monitor financing, to analyze the needs of companies, ecord the lending criteria of banks as well as the financing programs, formulate proposals and better coordinate the parties involved. All sides agreed on the need for loans to be channeled to healthy companies for investment, while government representatives stressed the need for loans to be disbursed under the Recovery Fund not to become non-performing. The financing scheme provides for 40% of the investment to be covered by the fund’s resources, 20% will be the company's own participation and the remaining 40% will be covered through bank lending. For their part, lenders stressed that there should be clear criteria for the eligibility of investments and that loans cannot be given to unsustainable companies. They stressed that many companies are unprofitable and that in order to increase the perimeter of businesses, especially in terms of small size, banks asked for the help of tools that will reduce credit risk, ie some form of government guarantees. The government seems to have chosen to provide guarantees only for very specific programs.

Deputy Finance Minister Theodoros Skylakakis underlined that financing will be eligible only for investments and not to cover other needs, such as working capital, emphasizing that the loans should be repaid normally. He also noted that in combination with the NSRF programs, small businesses will be able to achieve very low interest rates, about half of the current ones. Representatives of the Athens chamber of commerce stressed the need for loans not to go to the same companies, adding that there are many companies with serious and sustainable investment plans, citing the large number of people they employ. They also asked for the active contribution of banks in the preparation of the investment plans while emphasizing the need to take advantage of the new bankruptcy code, providing for a second opportunity.