The Bank of Greece will activate a plan to resolve the 60 pct of nonperforming loans (NPLs) not covered by the "Hercules" plan proposed by the government, bank governor Yannis Stournaras revealed while speaking at the Thessaloniki Summit 2019 on Friday evening.
EU-approved Hercules asset protection scheme foresees 9 billion euros in state guarantees to help reduce banks' NPLs via a 40 billion euros taxpayers' buffer.
Stournaras called project Hercules "a positive step in the right direction, but a small step," that would need additional measures. "Hercules covers nearly 40 pct of NPLs, leaving 60 pct which must be dealt with in other ways," the central bank governor said.
Commenting on the International Monetary Fund's (IMF) report on Greece released the same day, he asserted he does not share its pessimistic forecast on the country's productivity, and estimated Greece will fare "slightly better".
The report said that over the medium term growth prospects are weighed down by adverse demographics and low productivity. "The problem is not for 2020, the problem is for later," when the Fund drops economic growth rates too much, he noted, criticizing the forecasts. Noting that the IMF follows a "traditionally very conservative approach for Greece and other countries, which relates to aging population," he said that neither he nor, possibly, the European Commission agreed with these forecasts.
Stournaras added that he believes conditions are now ripe for the Greek government to seek a reduction of primary surplus targets. "We need to convince our partners, especially the European Stability Mechanism and the Eurogroup, that this is a win-win situation, because that is how both we and our lenders will benefit," he observed.
Speaking on Greek banks in general, Stournaras asserted that Greek bank assets at this point approach the average European rate. "If they resolve their NPL issues and the issue of deferred taxation, then we could foresee investors coming to Greek banks, because investors will see them as a great opportunity."