How will the €20 billion in “processed” loans be returned to the banks?

Written by Angeliki Filisiotis

The Chief Financial Officers (CFOs) of the four systemic banks focused on the issue of returning “processed” loans to banks that were acquired by service providers under their “umbrella”. Lazaros Papagarivalou of Alpha Bank, Harris Kokologianis of Eurobank, Christos Christodoulou of National Bank, and Theodoros Genardellis of Piraeus Bank, in the context of a roundtable discussion organized by Capital Link.

“The loans currently managed by the service companies are close to 70 billion euros. Of this, 15 billion euros relate to the securitization of Heracles and another 20 billion euros in other transactions. These are clearly higher risk assets and the important thing is that when they return to the banks they do not increase the risk exposure,” Mr. Janardellis stressed.

According to him, if half of the 70 billion euros goes through restructuring, with a reduction of 30% to 40%, around 15 to 20 billion euros in loans could eventually be returned to the banks. “This will not happen immediately, mainly because the policy of the service providers, given the difficulty in which the borrowers find themselves, may include, for example, intensive solutions and so on which make it difficult to qualify the loans as Phase 1,” he added, estimating that this process, which requires the cooperation of banks and service providers, will start from 2025.

“It is clear that the banks also want to repay the loans in question. Provided that the cost of risk is not affected, of course. We cannot return to a cycle of defaults that would raise questions about the quality of banks’ funds. There must be sufficient data and information about the payment history.”

Credit extension

“The four CFOs see an increase in demand for loans, not only in the corporate sector, but also in the retail sector and especially in housing loans. Indeed, they stressed, the “Baiti” program, as well as the banks’ initiatives for young people, are bringing a certain amount of movement to the market.

Dividends – Excess Liquidity

Regarding dividends, but also excess liquidity, the CFOs of the systemic banks stressed that the objective is, on the one hand, to strengthen the distribution ratios and, on the other hand, to make a careful use of funds, in order to increase the value for shareholders.

All four CFOs cited organic growth within and outside the borders, buybacks, and repayment of loans from service providers as opportunities for the local financial system. “Inorganic growth, i.e. through acquisitions, should be done carefully and with the aim of avoiding ‘burning’ capital, without translating into real value for shareholders,” they said.