Financial Crisis and Non-Performing Exposures in Greece
The article describes the history of the Greek banking crisis of the decade 2010-2019 as well as the challenges Greek banks face today. Some banks are out of the woods, yet increased profitability is a one-way street, in the midst of a low interest rate environment and increased competition from Big Tech companies. A fast reduction of the high level of Non-Performing Exposures (NPEs) to single digits is constrained by the availability of capital and by the legislation on Deferred Tax Credit. The article provides a sensitivity analysis of the bank capital needs as a function of the price haircut in non-performing loan securitizations demanded by the market and of the strictness of the minimum core equity capital requirements enforced by the regulator.
The article is translated from the original article in Greek, published in a book of conference proceedings, entitled: “Obligations of Financial Institutions, Proceedings from the 29th Panhellenic Conference on Commercial Law,” pp.245-298, edited by the Association of Greek Commercialists, Nomiki Vivliothiki, Athens, 2021.