EC Agrees to Prolong Scheme to Support NPL Reduction at Greek Banks
EC has approved the prolongation of an existing Greek scheme aiming to support the reduction of nonperforming loans, or NPLs, of Greek banks on the basis that it remains free of any State aid. The existing asset protection scheme (known as “Hercules”), was approved by EC in October 2019, for an initial duration of 18 months. Greece had notified EC about its plan to prolong the scheme for another 18 months, until October 2022.
“Hercules” is designed to assist banks in securitizing and moving nonperforming loans off their balance sheets. Under the scheme, an individually managed private securitization vehicle will buy nonperforming loans from the bank and sell notes to investors. The State will provide a public guarantee for the senior, less risky notes of the securitization vehicle. In exchange, the State will receive remuneration at market terms. The objective is to attract a wide range of investors and to support banks in their ongoing efforts to reduce the amount of nonperforming loans on their balance sheets. Since the introduction of the scheme in October 2019, Greek banks have made significant progress in reducing the stock of their nonperforming loans. EC found that, under the prolonged scheme, the Greek State will continue to be remunerated in line with market conditions for the risk it will assume by granting a guarantee on the senior tranche of securitized nonperforming loans. If a member state intervenes as a private investor would do and is remunerated for the risk assumed in a way a private investor would accept, such interventions do not constitute State aid. EC, therefore, concluded that the prolonged Greek measure does not involve State aid within the meaning of the EU rules.
Related Links
Keywords: Europe, Greece, Banking, NPLs, Securitization, State Aid Rules, Loan Guarantee, Credit Risk, Basel, EC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
Bundesbank Publishes Reporting Updates in April 2021Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
