Greece’s government will draft a new legal framework by early September for restructuring non-performing loans, Development Minister Nikolaos Dendias said.
The issue is a “top priority” for the ministry and the government, Dendias told reporters in Athens today. He said the draft law will move forward if it receives no objection from the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund.
Strategic defaulters shouldn’t assume they’ll be allowed to avoid paying back their loans, Dendias said. “People who intentionally default on their debts should not expect to be pardoned by this law,” he said, according to a transcript of today’s press conference.
After six consecutive years of recession that wiped out almost a quarter of the Greek economy, banks’ bad loans have ballooned to around 77 billion euros ($103 billion) -- more than 40 percent of the Mediterranean country’s gross domestic product.
Dendias said today that the government’s proposals for handling bad loans won’t affect the capital position of Greek lenders. As a result, the plans shouldn’t affect the ongoing euro area-wide stress tests conducted under the auspices of the European Central Bank as it takes over bank supervision.
In the first quarter of this year, loans more than 90 days overdue were 37.9 percent of total loans extended by Piraeus Bank, 33.3 percent at Alpha Bank, 23 percent at the National Bank of Greece, and 30.9 percent at Eurobank, according to the respective filings of the biggest Greek lenders.
Spokeswomen for the IMF and the European Commission did not have immediate comment.