Stricter rules for loan issues

New loan issues by local lenders will become harder from January as they must adhere to strict risk assessment criteria. Meanwhile Morgan Stanley has warned that the price Greek banks will pay for slashing their bad loans will be major reductions in their stock values.

A new act by the Bank of Greece, to implement the directives of the European Banking Authority on risk assessment and the recording of losses from loan issues, will force Greek banks to make exceptionally detailed assessments of the risks they take and to increase provisions for nonperforming exposures (NPEs).

The new loan issue criteria will need to become so much stricter, for instance, that upon assessing their risk banks will have to take into account a much broader range of information concerning historic data on loan forfeiting rates as well as forecasts for the future, weighing factors such as...

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