Restructured market red loans in Hellas is gaining more and more ground, as the S&P ratings agency highlights, estimating that a significant acceleration is expected in 2023 as many non-performing loans are “refreshed” and become serviceable again, providing significant support to the outlook for the Greek economy. and figures of Greek banks.

In its new report on NPLs in Europe, the chamber notes that the dynamics of the NPL market are developing, while a new wave of NPLs is expected due to high inflation, pressure on the macroeconomic front and uncertainty around the outcome and consequences wars in Ukraine. However, S&P believes that the credit quality of the loan portfolio of European banks as a whole has improved since the financial crisis due to improved underwriting policies. It also provides for a medium-term return on investment in NPLs and NPLs if macroeconomic conditions stabilize and become more favorable for securitization.

The financial crisis had a significant impact on the European economy and banking system, leading to large volumes of non-performing loans, which at the time were a concern for financial markets in some European countries such as Greece, Italy, Spain and Ireland, S&P notes. . To reduce their NPLs and improve their capital position, banks sold NPL portfolios at a discount to their local NPLs as well as investors, although they could use securitization as another alternative to reduce NPLs, which was not common at the time. but has recently become popular.

In Italy and Greece, which account for more than two-thirds of total NPLs in Europe, banks have successfully used government-backed schemes, GACS in Italy in 2016 and Herakles in Greece in 2019. These government programs have significantly reduced non-performing loans. risks on the balance sheets of banks in both countries and contributed to the development of active markets for non-performing loans. Although they expired in 2022, their terms or possible extension are being discussed, especially for the Italian GACS. As for Greece, if Hercules is not renewed, it will immediately change the dynamics of the Greek NPL market, which could lead to further private and public transactions.

Banks have been creating provisions for restructured bad loans for several years by calculating relative credit risk on their balance sheets. Therefore, selling RPL at a discount can be beneficial for the industry, according to the House of Representatives. Although S&P does not expect significant changes in the RPL market in Italy, it looks especially optimistic about Greece. “We have begun to see some interest in the Greek market for revolving loans. “Potentially, after a large volume of friendly NPL settlements, we expect the NPL market in Greece to grow significantly as restructured NPLs become serviceable again,” he stresses.

It is worth noting that in December the House of Representatives predicted that Greek banks would be the only ones in Europe, along with Irish and Cypriot banks, to record a decline in NPE ratios in 2023, with Greece recording the biggest decline, above 23%, as the relative figure will be 6.6%, from 8.6% in 2022.