BoG submits bad-bank plan

Greek banks are expected to transfer bad loans of 40-45 billion euros to an asset management company (AMC), according to the formal proposal to be submitted to the government on Wednesday by the Bank of Greece. This will then be tabled for approval by the European monitoring authorities and then the banks themselves.

The BoG plan for a "bad bank" targets the full streamlining of bank balances, relieving them not only of the bad loans the decade-long financial crisis has bequeathed to the credit sector, but also the nonperforming credit from the coronavirus crisis, expected to run up to €10 billion.

The proposal is combined with the reduction of deferred tax assets, which amount to €15.5 billion and constitute a significant share of Greek banks' capital. After the completion of the securitizations of bad loans that the banks have set in motion, the deferred tax assets...