A case in point: Greece's bad bank for NPLs

Author: | Published: 27 Mar 2018

The member state is looking at launching a so-called bad bank to tackle its pile of bad loans. But some obstacles lie ahead

Eight years after the start of the European debt crisis, excessive private indebtedness and the high stock of nonperforming loans (NPLs) remain a key obstacle to the recovery of the European periphery. Nowhere is this problem more profound than in Greece, where NPLs represent roughly 40% of the country's GDP, the highest in the EU. The strong presence of distressed assets on banks' balance sheets negatively affects the availability of credit, tying up significant bank resources (financial and human) and depriving businesses and the real economy from much needed funds. Small and medium sized enterprises which are the backbone of the Greek economy and rely solely on bank lending feel the effect of this the most. In addition to this, excessive private debt weighs negatively on credit...