September 25, 2019 12:34 pm

“Hercules” scheme: How Greece will support its banks

Greece has adopted further measures to strengthen its own banking sector. According to the “Hercules” plan, bad loans worth up to 30 billion euros are to be securitised and outsourced to an Asset Protection Scheme (APS). The Greek State will then provide guarantees for the senior notes, which will remain in the banks’ balance sheets for the time being.

According to the German outlet Handelsblatt, deputy Finance Minister Giorgos Zavvos agreed on the procedure in close cooperation with the banks, the Greek bank rescue fund HFSF, the European banking supervisory authority SSM and the EU competition authority (DG Comp). The EU still has to agree to the “Hercules” scheme.

The Greek banks are still sitting on a huge mountain of bad loans – at the end of July the sum amounted to almost 80 billion euros. Only when the risks finally disappear from the banks’ balance sheets will they be able to fulfil their real task, namely to support the Greek economy by granting new loans. Bloomberg, Handelsblatt (Paywall)

This post was written by Jens Secker

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