BoG to offer 'bad bank' plan by end-May

The Bank of Greece is working on a plan for the creation of a "bad bank" to which all nonperforming loans (NPLs) of banks will be transferred. The central bank intends to present the plan to the banks, the government and the European Central Bank's Single Supervisory Mechanism (SSM) by end-May.

The BoG believes that, under the new conditions the coronavirus pandemic has created, the existing plan for the reduction of NPLs through securitization cannot be implemented fast enough for banks to play their customary role and finance the economy.

The main point of the plan is the transfer of bad loans over three months past due, aiming at the immediate easing of pressure on banks' financial data, as securitizations would require at least another year before the market reverts to normal. The plan will be voluntary, allowing every lender to choose the portfolios it will...