{"id":18611,"date":"2018-11-13T16:32:16","date_gmt":"2018-11-13T14:32:16","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=18611"},"modified":"2018-11-13T16:32:16","modified_gmt":"2018-11-13T14:32:16","slug":"greece-said-to-weigh-freeing-banks-from-47-billion-of-bad-debt","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/18611","title":{"rendered":"Greece Said to Weigh Freeing Banks From $47 Billion of Bad Debt"},"content":{"rendered":"
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Greece Said to Weigh Freeing Banks From $47 Billion of Bad Debt<\/h1>\n<\/div>\n
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  • Central bank plan sees banks\u2019 tax claim assets moving to SPV<\/li>\n
  • Special vehicle will issue bonds, use proceeds to buy bad debt<\/li>\n<\/ul>\n<\/section>\n
    By Christos Ziotis, Sotiris Nikas and Nikos Chrysoloras<\/p>\n

    (Bloomberg) —\u00a0<\/section>\n

    Greece\u2019s central bank is working on a plan to help banks cut their bad debts in half, the latest effort to restore trust in the country\u2019s financial system, two people familiar with the matter said.<\/p>\n

    Under the proposal, Greek lenders would transfer about half of their deferred tax claims to a special purpose vehicle, which will then sell bonds and use the proceeds to buy some 42 billion euros ($47 billion) of bad loans from the lenders, according to the people, who asked not to be named as the plan hasn\u2019t been finalized yet.<\/p>\n

    The Greek lenders\u2019 tax claims currently account for most of their capital. As claims against the state, they were granted to offset losses suffered during the country\u2019s debt restructuring. It\u2019s unclear whether investors would have an appetite for the bonds backed by these claims.<\/p>\n

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    The Bank of Greece\u2019s plan differs from a\u00a0proposal floated\u00a0by the\u00a0Hellenic Financial Stability Fund\u00a0earlier this year, which envisaged\u00a0creating\u00a0a vehicle partly funded by hard cash chipped in by the sovereign. The central bank has concerns that the HFSF\u2019s proposal may have some drawbacks, while the money available would only suffice to unload some 15 billion euros of bad debt, much less than required.<\/p>\n

    Greek bank stocks have\u00a0dropped\u00a0by more than 40 percent this year amid lingering doubts that they can deal with a mountain of bad debt lingering from the steepest recession in living memory. Adding to their woes, European supervisors have asked them to reduce their non-performing exposures by about 60 percent by the end of 2021, a target that may not be achieved without burning more capital than they currently hold.<\/p>\n

    The Bank of Greece\u2019s plan has been submitted to the\u00a0European Central Bank\u2019s Single Supervisory Mechanism and the Greek finance ministry, while any use of public guarantees is subject to approval by European Commission competition authorities. One of the people said that European regulators could approve both the Bank of Greece\u2019s plan and that from the HFSF, giving lenders more tools to clean up their balance sheets.<\/p>\n

    While the transfer of the tax credits to the SPV will deplete banks of some of their capital for a short period, their ratios will bounce back once the sale of the bad loans is completed, one of the officials said. After several recapitalizations in recent years, common equity Tier one ratios at Greek banks currently range from about 14 percent to almost 19 percent.<\/p>\n

    The SPV would buy the bad loans from the banks at market prices, one of the officials said. While this may mean a further hit to their capital if the provisions the banks have taken are lower than the market prices, the blow would be small and manageable, while lenders would end up with higher quality capital, the person said, adding that supervisors have reviewed the numbers.<\/p>\n<\/section>\n

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    Greece Said to Weigh Freeing Banks From $47 Billion of Bad Debt Central bank plan sees banks\u2019 tax claim assets moving to SPV Special vehicle will issue bonds, use proceeds to buy bad debt By Christos Ziotis, Sotiris Nikas and Nikos Chrysoloras (Bloomberg) —\u00a0 Greece\u2019s central bank is working on a plan to help banks<\/p>\n","protected":false},"author":1,"featured_media":9762,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[],"class_list":["post-18611","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-2"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=18611"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18611\/revisions"}],"predecessor-version":[{"id":18612,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18611\/revisions\/18612"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/9762"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=18611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=18611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=18611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}